Catena Media slips to €12.7m loss despite revenue growth in 2021

Total revenue for the 12 months through to 31 December 2021 reached €136.1m, up from $106.0m in the previous year.

Search revenue accounted for €129.0m of total revenue, up 34.5% from 2020, though paid revenue declined 16.5% year-on-year to $7.1m. Following the sales of the Hammerstone business in Q4 2020, subscription revenue was zero, compared to €1.6m in 2020.

Revenue from cost-per-acquisition affiliation accounted for 54% of all revenue for the year, while 37% came from revenue-sharing arrangements, and the remaining 9% was generated from fixed-fee models.

Breaking down this performance by business segment, casino remained Catena’s primary source of revenue, with operations here generating €86.2m in revenue, up 23.9% year-on-year.

This, Catena said, was helped by its ongoing expansion within the North American market, as well as growth in Japan, but progress was slightly hampered by the introduction of new regulations in Germany and the Netherlands during the year, with revenue down in these markets.

Sports betting revenue was also up 51.0% to €46.2m, again helped by growth within North America. Catena highlighted the launch of legal sports wagering in Michigan, Virginia and Arizona in particular, adding that the opening of regulated markets in both New York and Louisiana shortly after the year-end will support further growth.

Financial trading revenue, however, fell 36.2% year-on-year to €3.7m due to the sale of the Hammerstone business and a temporary slowdown related to changes in Catena’s partner portfolio. The affiliate said revenue in this area is expected to normalise in Q1 2022.

“We continue to position ourselves for the global trend towards betting and casino regulation,” said Michael Daly, who became chief executive of Catena in March 2021. “The strict restrictions imposed on online gaming in Germany in the last year have been a challenging experience for us and the industry as a whole. 

“But our intention is to learn from the process so we are better positioned in countries that may regulate in the future. Our business model thrives in regulated markets, and we embrace regulation as a way to ensure a level playing field and transparency for all.”

However, total operating expenses increased 96.6% to €132.7m. Staff costs hiked 35.6% to €32.0m, partly due to a short-term incentive programme, while direct costs climbed 53.5% to €15.5m.

Depreciation and amortisation expenses were 7.8% lower at €10.7m, but general operating costs increased 10.1% to €25.1m, while Catena also noted a €49.4m impairment charge on its intangible assets in Q3 relating to German and French sport assets.

Taking out certain expenses and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was 32.3% higher at €68.8m for the year.

However, after including €4.6m in interest expenses, €1.7m in losses on financial liability and equity instruments and €2.9m in other finance costs, this left a pre-tax loss of €5.8m, compared to a €14.8m profit at the same point in 2020.

Catena paid €1.4m in income tax, leaving an initial net loss of €7.2m, in contrast to a €12.5m profit in 2020.

After also including €986,000 in negative impact from foreign currency translations, as well as €4.5m in interest payable on hybrid securities, this left a comprehensive net loss of €12.7, compared to a €11.1m in the previous year.

Turning to the fourth quarter and revenue for the three months to 31 December was 19.9% higher at €31.9m. 

This was split €30.5m for search revenue and €1.4m in paid revenue, while casino revenue was €19.9m, sports betting €11.1m and financial trading €876,000.

Operating costs were 39.8% higher at €23.2m, while after including €1.2m in interest costs and €1.2m in other finance costs, only partly offset by €275,000 in gains on financial liability and equity instruments, this left a pre-tax profit of €6.6m, down 22.4% year-on-year.

Catena also noted that adjusted EBITDA for the quarter amounted to €12.8m, which was 4.1% more than in the corresponding quarter in 2020.

The affiliate paid €812,000 in income tax in Q4, leaving an initial net profit of €5.8m, down 24.7% from €7.7m in the previous year.

However, after accounting for a €161,000 negative impact from foreign currency translations and €1.1m in interest payable on hybrid securities, Catena ended the quarter with a comprehensive net loss of €1.2m, only marginally wider than the €1.3m net loss posted in Q4 of 2020.

“Investments were made across the group in personnel and technology to support growth and to further improve the foundational architecture of our brands, so we are fully equipped to deliver profitable double-digit growth today and for years to come,” Daly said.

“This spending on our future long-term success will continue through 2022.”