Another strong quarter of revenue growth and forward momentum

Catena Media plc: Interim Report January - June 2021

Highlights of the second quarter of 2021

• Operating revenue was EUR 30.4m (27.8), an increase of 9 percent.
• Organic growth was 9 percent, or 17 percent excluding the now-regulated German iGaming market.
• New depositing customers (NDCs) totalled 140,025 (104,326), an increase of 34 percent.
• Revenue in North American iGaming rose by 37 percent and accounted for 41 percent (33) of group revenue.
• Adjusted EBITDA increased by 1 percent and totalled EUR 14.9m (14.8), corresponding to an adjusted EBITDA margin of 49 percent (53).
• EBITDA, including items affecting comparability of EUR 2.3m (1.7), decreased by 3 percent and totalled EUR 12.7m (13.0), equal to an EBITDA margin of 42 percent (47). Out of the EUR 2.3m items affecting compar­ability, EUR 1.3m related to refinancing costs and EUR 0.8m related to restructuring.
• Earnings per share were EUR 0.09 (-0.13) before dilution and EUR 0.06 (-0.07) after dilution.
• Operating cash flow decreased by 6 percent to EUR 16.4m (17.4).
• Cash and cash equivalents totalled EUR 29.1m (82.6) on 30 June.
• Net interest-bearing liabilities (NIBL) were EUR 50.9m (84.9) on 30 June, resulting in a leverage ratio (NIBL/adjusted EBITDA) of 0.79 (1.68).
• On 4 May, Catena Media acquired Lineups.com, a leading US online sports affiliation company specialising in analytics, betting predictions and tools.
• During the quarter Catena Media issued EUR 55m of new bonds and redeemed outstanding bonds of EUR 88.5m.

Highlights of the first half year 2021     

• Operating revenue was EUR 71.1m (54.5), an increase of 31 percent.
• Organic growth was 31 percent, or 46 percent excluding the now-regulated German iGaming market.
• New depositing customers (NDCs) totalled 297,571 (223,855), an increase of 33 percent.
• Revenue in North American iGaming rose by 121 percent and accounted for 49 percent (29) of group revenue.
• Adjusted EBITDA increased by 44 percent and totalled EUR 40.0m (27.7), corresponding to an adjusted EBITDA margin of 56 percent (51).
• EBITDA, including items affecting comparability of EUR 4.1m (2.2), increased by 41 percent and totalled EUR 36.0m (25.5), equal to an EBITDA margin of 51 percent (47). Out of the EUR 4.1m items affecting comparability, EUR 1.4m related to refinancing costs and EUR 2.5m related to restructuring.
• Earnings per share were EUR 0.34 (0.02) before dilution and EUR 0.23 (0.01) after dilution.
• Operating cash flow increased by 30 percent to EUR 37.2m (28.6).

Significant events after the period

• An extraordinary general meeting on 14 July authorised the company to acquire its own shares.
• The board of directors moved forward with plans to commence a share buyback programme during autumn 2021. The precise timing remains under consideration.
• Organic revenue grew 2 percent in July, or 11 percent excluding the newly regulated German iGaming market.

CEO Michael Daly’s comments

I am exceptionally pleased with the group’s financial results for the second quarter, in which we surpassed last year’s revenue by 9 percent and lifted adjusted EBITDA by 1 percent. This outcome represents a notable achievement considering the one-off spike in casino gaming seen in the second quarter of 2020, when COVID-related lockdowns sparked an unprecedented surge in consumer interest and player activity.

The results demonstrate the robustness of our business model as they came in the face of low seasonal sports activity in the US, the re-opening this year of land-based entertainment venues in North America and other locations, and a sharp increase in product investment in Q2 compared to the same period last year. These factors together explain the expected drop in quarter-on-quarter revenue and EBITDA.

Among the highlights was North America, where Q2 traditionally brings a dip in sports betting coinciding with the end of the major sports seasons. This year we offset this seasonal lull with strong growth in the Casino segment. Michigan state, which opened for online gaming in January, exceeded our expectations and high­lighted the business value we can create from establishing strong footholds in the Casino segment as well as in Sports.

In North America, we increased our investment in product positioning and keyword and search optimisation during the quarter in readiness for the resumption of the sporting calendar in Q3. We also acquired the leading US sports website Lineups.com in a strategic investment that gave us a second national business-to-consumer sports website alongside our homegrown flagship TheLines.com. Following a swift integration process, Lineups has performed in line with expectations given the customary sharp dip in sports during the summer off-season. We expect a strong performance from September, when the National Football League (NFL) resumes and player activity traditionally surges. The website has begun to benefit from cross-sharing between it and TheLines that will increase overall traffic flow to both products and further strengthen our offer.

Lineups has high future potential and will also help optimise our position in new states as their markets open for online sports betting. Arizona, Louisiana, Wisconsin, Maryland and Connecticut have all signalled an intention to regulate iGaming in the near future. Arizona, where 20 operators are already allowed to go live, may be first out and we are well placed in this market and the others thanks to our portfolio of websites that are primed and waiting for the green light. In Canada, Ontario is gearing up to become the first casino market to go online. Although the timing remains unclear, this will deliver a further boost to our North American business.

Brand transformation initiatives remained on track in our European Casino business, while Catena Media’s global brands continued to cement their international footprint and break new ground. In April, AskGamblers.com notched a new monthly revenue high, an impressive showing given the huge spike in online casino demand seen at the same time last year due to the COVID-19 lockdown. However, due to both seasonality and changing crypto values impacting operators, it did not reach any further highs during the quarter.

Global brands are showing strong growth opportunities in Japan, which remains a powerhouse and recorded double-digit revenue growth in Q2. We reinforced our Japanese management team during the quarter as part of a strategic plan to build our presence in Asia-Pacific, which is home to a number of high-potential markets.

In the Sports segment, our European markets performed well thanks partly to the resumption of live sports events, including the deferred Euro 2020 soccer championship. The tournament exceeded expectations given the amount of work our teams were able to do in a short period to position us well in the UK, Germany, Italy and France. Our plan is to invest further in our European Sports business and capture market share as the world resumes.

In Europe, Germany will remain a problem child for some time to come due to a lack of clarity surrounding the market impact of new regulations. Nevertheless, as operators acclimatise to the restrictions and obtain operating licenses, affiliates will gain fresh market access and I see Germany becoming a good market for Catena Media in the next couple of years.

Despite a drop in revenue during the quarter that related partly to the sale of the Hammerstone business at the end of 2020, our Financial Trading segment remains a solid business.

During the quarter we completed a bond refinancing process that allows us to manage our debt while retaining the flexibility to conduct strategic acquisitions and explore share buybacks, dividends or other measures of potential benefit to the organisation and investors. The successful purchase of Lineups demonstrates our ability to implement acquisitions professionally and the robustness of our process to bring targets on board and integrate them effectively when the right opportunities arise. Strategic acquisitions remain a key growth tool and our strengthened balance sheet gives us heft in this area.

Looking ahead, we are moving ever closer towards our goal of a globally diverse portfolio with a strong presence in North America and Europe buttressed by positive contributions from Asia, Latin America and Africa as markets there come on line. Our transformation plan to prioritise keyword and search engine optimisation and product content development in key markets is on schedule and progressing as expected. We expect the transformation effort to begin delivering a positive revenue impact later this year and to provide lasting impact as we move into 2022 and beyond.

Presentation of Catena Media’s second quarter results

A combined audiocast and telephone conference with the opportunity to ask questions will be held at 09:00 CEST on the same day, with CEO Michael Daly and Group CFO Peter Messner presenting the report.

The presentation audiocast will be accessible via the following link:
https://tv.streamfabriken.com/catena-media-q2-2021

The presentation will also be available on our website:
https://www.catenamedia.com/investors/reports/quarterly

To participate via telephone, please call any of the following numbers:

SE: +46 8 505 583 73
UK: +44 33 330 09 260
US: +1 646 722 49 04

For further information, please contact:  

Michael Daly, CEO
Phone: +1 702 300 6720, E-mail: michael.daly@catenamedia.com

Peter Messner, Group CFO
Phone: +46 768 95 26 93, E-mail: peter.messner@catenamedia.com

Investor Relations
E-mail: ir@catenamedia.com

This information is information that Catena Media plc is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons, on 25 August 2021 at 07:00 CEST.

About Catena Media

Catena Media has a leading position within online lead generation. The company has about 400 employees in the US, Australia, Japan, Serbia, the UK, Sweden, Italy and Malta (HQ). The company is listed on Nasdaq Stockholm. Further information is available at www.catenamedia.com.