Catena Media has announced it will be laying off 29 employees in advance of the Q3 trading call in an attempt to “streamline and rightsize” the content and marketing teams.
Looking ahead to the call on 7 November, the affiliate booked a non-cash impairment charge of €40m.
Catena cited the authorising of a writedown of “specific sports betting assets” for the impairment charge as it transitions to a new operating model.
As disclosed in H1 trading, Catena modified its remaining US media network, taking the “strategic decision to focus product development efforts on a cluster of core brands.”
Preliminary figures for the firm indicate that Q3 revenues will stand between €10.5-€11.0m (Q32023: €15m). Catena expects adjusted EBITDA to be in the range of €1.0-€1.5m (Q32023: €3.2m), corresponding to a margin of 10-14%.
CEO Manuel Stan commented: “It is important that our balance sheet reflects current realities. In sports betting, we have been operating at a loss for an extended period. We have responded to market challenges by shifting resources away from loss-making products and into those that we believe have the best potential to generate long-term value. I believe that this strategy will position us for success in the coming quarters.”
Staff redundancies will see Catena pay severance costs of approximately €400,000, with Catena projecting cost savings of €2.2m, effective from 1 November 2024.
Stan added: “As part of our drive to embed our new product-led organisation, we are optimising the operational teams to achieve a flatter structure that is more closely aligned with our product goals. Today, our priority is to support all the individuals who are affected by these changes.
“We are keenly aware that the market is looking for signs of a return to revenue growth. Although the figures reported today do not yet show that improvement, we see positive signals from the changes we have made in recent months, such as a leaner cost base and improved search rankings, and we remain on course to achieve our objectives.”
Catena Media suffered a revenue dip for the third quarter, with North America continuing to be the most prevalent source of profit for the group.
Overall, revenue for the group decreased by 33% to €10.7m, whilst revenue from North America dropped by 29% to €19.5m.
As well as this, there was also a slight dip in new depositing customers (NDCs) from continuing operations which totalled 27,342 (40,104), a decrease of 32 percent.
Manuel Stan commented on the firm’s performance: “From a top-line perspective, Q3 was a challenging quarter in which we saw revenue decline by 33%, driven by continued underperformance in online sports betting. Lower revenue also reflected the ending of certain media partnerships and changes made to other partner agreements.
“The flipside was that these cost-side measures lifted the adjusted EBITDA margin from 1%in July to 18% in September and double adjusted EBITDA quarter-over-quarter. Alongside this bottom-line improvement, we also saw a like-for-like increase in North American Casino revenue and incremental gains in our key organic search rankings, despite higher-than-usual volatility due to Google’s core updates.”
Ahead of the update, Catena had taken efforts to “streamline and rightsize” the content and marketing teams, announcing 29 layoffs.
The firm looked to modify its remaining US media network, taking the “strategic decision to focus product development efforts on a cluster of core brands.”
Stan added: “In late October we completed the process of finalising our organisational structure, implementing a flatter content production function that creates a foundation for future growth led by a leaner, product-oriented organisation with clear accountability at all levels.
“The streamlining of the content production and content marketing teams involved the difficult decision to part ways with 29 employees. This rightsizing will create closer alignment with our product goals and will generate an annual cost saving of around €2.2m, starting in November.
“We also completed our new executive management team with the recruitment of Liv Biesemans as Chief Legal & Compliance Officer. When Liv joins us on 1 January, all five members of the executive management team will be new in their roles.
“With the right teams and strategic priorities in place and a clear focus on our core products, we now have a strong base to tackle our next challenge: delivering profitable growth.”
Stan also went on to provide a positive outlook for the firm’s North American casino operations as he revealed that the drop in revenue from €8.6m to €7.6m was ‘primarily a reflection of casino revenue related to prior quarters.
He continued by stating that ‘excluding this, casino revenue rose slightly during the period, maintaining the year-over-year trend observed in Q2’.
“A highlight for the quarter was the evolution of Bonus.com, one of our top-performing casino products, into a global asset. The Spanish-language version launched in North America in Q2, started to rank well, and we launched it in Mexico at the end of Q3. In November, we also launched the brand in Brazil. These rollouts illustrate our strategy to maximise the organic growth potential of our most authoritative brands in existing and new markets.
“We made further progress incorporating social sweepstakes casinos into most of our casino offerings. Social sweepstakes casino continues to form part of our long-term casino strategy, capitalising on the immediate revenue opportunity while also building our brands and databases in preparation for future regulation, especially as online casino gaming is yet to regulate in the majority of US states.”
