Catena Media adjusted EBITDA plunges 88% YoY in Q4 2023 while future tech investment to impact bottom-line

Catena Media has reported an 88% slump in adjusted EBITDA in Q4 2023 as a lack of major US sports betting state launches and overall US market headwinds impacted operations.

Adjusted EBITDA fell from €11.8m (£10m) to €1.5m, with a corresponding drop off in adjusted EBITDA margin from 48% to 10%.

EBITDA from continuing operations stood at €500,000, down from €12.3m, with a margin of 3% compared to 2022’s 50%.

The affiliate stated that the conversion of some of its operator deals from cost per acquisition to revenue share had also impacted revenue flow in Q4 2023.

Revenue did decline in the final quarter of the year, with overall revenue from continuing operations dropping by 41% from €24.5m to €14.5m.

Following the publication of the results, Catena’s share price has dipped 6.7% at the time of writing to SEK8.8.

Despite the firm’s continued push towards the US market, revenue from the US fell by 43% from €21.5m in 2022 to €12.3m in 2023 and accounted for 85% of the group’s revenue in Q4.

Revenue from casino operations fell by 28% to €9m while adjusted EBITDA from the arm dipped 51% to €3.4m.

Sports betting revenue decreased by 55% to €5.4m, with North American sports revenue falling from €11.3m to €4.5m.

New depositing customers (NDCs) fell 43% at a group level to 32,032. Breaking this down by vertical, sports betting NDCs fell by 48% to 17,538, and casino NDCs dropped by 35% to 14,494.

Catena Media also announced its full-year results alongside its Q4 results. Overall revenue from continuing operations fell by 22% to €76.7m, with North American revenue dropping by 21% to €67.1m.

Adjusted EBITDA from continuing operations from 2023 also fell by 47% to €25.4m, and NDCs also experienced a drop off of 19% to 184,257.

Catena also released updated financial targets through to 2026. The firm expects to have double-digit organic growth in both revenue and adjusted EBITDA for 2025 and 2026 at group level. The company also anticipates net interest-bearing debt to adjusted EBITDA ratio of 0x to 1.75x.

The affiliate additionally noted it is focused on debt reduction and strategic investments going forward and having a significantly lower presence in grey markets.

Following the publication of the results, Catena Media CEO Michael Daly spoke of how the firm will be investing heavily in technology, including AI, in 2024, which will have a knock-on effect on the firm’s bottom line for the foreseeable future.

Daly said: “These projects are significant in the context of our Q4 figures, which were disappointing and with which I am not satisfied. Planned and initiated earlier in 2023, the investments have since been accelerated.

“They are designed to position us for the future and also to restore the group to a sustainable long-term growth trajectory. As a first step, we expect a resumption of organic growth in the second half of 2024 and to generate full-year adjusted EBITDA in the range of €20-30m.”

Daly also announced that Catena would be launching a tech platform in Q1 2024 and will be fully rolled out in Q2. The platform aims to make the firm more “robust across all products” and make it easier for the business to deploy in more verticals.

The CEO went on to say that Catena expects a challenging reporting environment until the aforementioned investments “gain traction”. He also added that Q4 was affected by market headwinds and that the firm faced difficult comparatives due to the absence of large state launches.

Daly concluded: “A strategic reboot on the scale that we have undertaken can take time and test the patience of employees and shareholders. Q4 was a difficult quarter, but I believe we are now turning the corner.

“My message today is that our goal is in sight: a leaner, nimbler multichannel Catena Media with the knowledge and technical infrastructure to thrive in our core regulated markets and to deliver a return to growth in the second half of this year.”