Catena Media CEO Michael Daly detailed that the firm is in a ‘position of strength’ to take advantage of North American opportunities after posting 11% YoY revenue growth in the region during Q3.
Posting its financial results for the third quarter of 2022, Catena Media recorded total revenues of $33.4m, down 2% YoY from Q321’s $34.2m.
North America provides significant opportunities for Catena Media
Whilst Catena’s European operations remain under review following poor performance, the firm’s North American, and particularly US operations, are going from strength to strength, with North American turnover reaching $19.2m, up 11% YoY and contributing to 58% of group revenue.
Success in the region was largely driven by a successful start to the NFL season and player engagement statistics meeting expectations.
Q3 also saw the addition of Kansas to legal online sports betting, which teamed up with the two aforementioned factors, helped to boost the firm’s NA revenues from Q321, labeled as ‘extremely strong’, given Arizona went live during that period.
Addressing investors, Daly said: In North America, the Kansas launch in September coincided with a successful start to the new NFL season and met our expectations for player engagement. Credit for this goes to our North American team, in which we have invested heavily both in terms of personnel and technology.
“This ongoing commitment positions us to take full advantage of forthcoming launches and will also provide a springboard to grow in our established markets. Three states – Maryland, Ohio and Massachusetts – have all announced their intention to legalise online sports betting in the near future, with Ohio committing to 1 January 2023 as its go-live date.
“We have advanced plans in place for these states, including operator collaborations in Ohio and Maryland that are already offering pre-live player deals. We continue on our path to surpassing our target of $100m in annual revenue.”
Making progress in sports and casino
Operationally, Catena Media secured its first major US deal, forming a content partnership with Advanced Local’s NJ.com in New Jersey, marking a major milestone in its US growth.
The firm’s sports segments posted revenue of $18.5m, down 10% YoY but in NA, it improved by 6%, reaffirming the group’s decision to double down on American investments.
This was, again, largely driven by the Kansas launch and a strong NFL season. The firm also noted that the acquisitions of The Lineups.com and i15 Media have begun to make positive contributions, however, revenue in Ontario is underwhelming due to heavy marketing restrictions.
The casino unit in North America posted double-digit growth, owing to its presence in all jurisdictions that offer igaming and its aforementioned NJ.com deal. Meanwhile, Catena Media revealed it is ‘the leading online casino affiliate in Ontario’ despite the difficulty in marketing.
Daly added: “Our strength and expertise in organic search has already made Catena Media the leading affiliate for online sports betting and casino in North America. We see no reason why this remarkable growth story should not continue.
“High player values and public enthusiasm for online sports betting and casino are projected to support high margins for the foreseeable future. And as the market gradually shifts towards maturity in terms of state launches, we believe that operator-side activities and the development and refinement of our affiliate offerings will preserve healthy growth rates even in established markets.”
Falling profitability group-wide
With North American growth firmly set in the sights, Catena Media’s operating expenses totaled $39.1m, up $5.1m YoY due to media and influencer partnerships including the NJ.com deal.
The fast-growing US scene also means that its NA headcount has increased by 73%, with personnel expenses increasing to $9.7m, up from $8.4m one year ago.
Rising expenses and declining group-wide revenues meant that Catena’s adjusted EBITDA fell 29% YoY to $12.1m, down from $16.9m one year ago. The adjusted EBITDA margin also fell 14 ppt to 36%.
Nevertheless, management remains optimistic for the future, especially given the hunger for the North American market opportunity.
Yet, in Europe, the strategic review announced earlier this year is almost complete, with some assets in a divestment phase. Talks have opened up and have reached an ‘advanced’ stage for divestments post-review.
Concluding his address to Catena Media investors, Daly noted: “Once the strategic review is behind us, I look forward to the organization redoubling its focus on the highly promising Latin American market. 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 organization make Catena Media uniquely placed to set the pace in lead generation for online sports betting and casino – in North America and beyond.”