Affiliate giant Catena Media has revealed that it is nearing the end of its strategic review, confirming it has laid off 25% of its European staff base, but has no plans to cut headcount further while talks over the possible divestment of certain assets continue.
Catena launched the review in May of this year with the initial idea of selling a number of its division, including the AskGamblers brand. This was then expanded in August to cover its entire European online betting and casino business, while it also announced it was to scale back its strategic investments as part of the process.
The wider review led Catena to begin a consultation process for redundancies in the UK and Malta. It has now confirmed that 25% of its whole European employee base has been laid off, with this to result in €5.5m (£4.8m/$5.7m) in cost savings from Q1 of 2023.
A Catena representative also told iGB that there are no further redundancies planned.
Catena also said talks remain ongoing over the possible sale of certain assets, having last month issued an update to say it was evaluating “multiple options” as part of the review, which had been due to complete in September prior to being expanded.
Review nearing completion
Upon publishing its third-quarter results, Catena chief executive Michael Daly said that the review is nearing completion, with certain assets currently in a divestment phase. Daly said a fuller announcement over the review will be made in the “near future”.
“Amid significant interest from multiple parties, this process is being managed by an external adviser and is approaching a conclusion,” Daly said.
“The measures being taken, and to be taken, as part of the strategic review are optimising the business to capitalise on the growth of online sports betting and casino in North America, where a wave of regulation continues to open new markets to licensed operators and create exciting openings for Catena Media.
“Other future opportunities include Latin America and esports, both of which offer high potential for profitable growth over the longer term.
“In Europe – the region where the current high-inflation environment is most pronounced and the squeeze on player spending is most acute – we scaled back our operations during the quarter to focus on a smaller core of strategic high-margin brands primarily in regulated online sportsbook markets, and to a lesser extent in casino. The key brands offer stable near-term growth potential and are located in the UK and Italy.
“The restructuring has also seen us offload certain grey-market assets as we transition fully into an organisation focused on the Americas and other regulated and stable markets.
“It is here that the appetite for supporting and extending licensed online sports betting and casino is strongest, and hence where we will be best placed to retain our market leadership and achieve high levels of sustainable growth over time.”
Catena Media Q3 results
Looking at the Q3 results, revenue for the three months to 30 September reached €32.3m, a 2.4% drop from €33.1m in the corresponding period last year.
Search revenue accounted for €30.8m of all revenue in the quarter, down 2.8% on Q3 2021, though paid revenue increased 7.1% year-on-year to €1.5m. Revenue-sharing made up 38% of total revenue, with cost per acquisition at 54% and fixed fees 8%.
In terms of business segments, casino revenue slipped 10.0% to €17.9m but sports betting revenue climbed 12.9% to €14.0m. Financial trading revenue declined 51.0% to €367,000.
Turning to costs and total operating expenses were slashed by 46.5% to €37.3m. Catena also noted €1.1m in finance costs, but this was more than offset by €1.9m in gains on financial liability at fair value.
As such, pre-tax loss was significantly reduced from €38.7m in Q3 of 2021 to €5.4m this year, a drop of 86.1%. Catena paid €319,000 in tax and after also including a negative €226,000 impact of foreign currency translation and €1.0m in interest payable on hybrid securities, this left a net loss of €6.9m, a significant improvement on €38.5m last year.
However, Catena did also note that adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) for the quarter was 28.7% lower at €11.7m.
Looking to LatAm
“Once the strategic review is behind us, I look forward to the organisation redoubling its focus on the highly promising Latin American market,” Daly said. “I fully expect that we will soon begin to see this dynamic region take on a significant role in our Americas story.
“Another exciting area is esports, where our Esports.net brand reported exceedingly rapid user growth in Q3 and where I see rich opportunities ahead.
“We continue to build for the future and do so from a position of unprecedented strength. Our low debt, strong cash flow, organic search know-how and lean organisation make Catena Media uniquely placed to set the pace in lead generation for online sports betting and casino – in North America and beyond.”