In a concerning turn of events for the digital marketing and affiliate company Catena Media, the first quarter of the year has revealed a stark 49.2% decline in revenue across all sectors of its business. This includes a particularly severe setback in North America, where revenue fell by half, significantly influenced by the downturn in sports betting income. The overall revenue for the rest of the world similarly dropped by 34.6%, painting a grim picture for the company’s performance.
The company’s interim CEO, Pierre Cadena, has indicated that these figures demonstrate a clear “underperformance,” which necessitates immediate action. Hence, Catena Media is poised to revamp its operational approach by introducing a new operating model. This strategic shift is complemented by a series of important managerial appointments and internal promotions aimed at strengthening the leadership team.
In recent developments, Manuel Stan has been announced as the incoming CEO of Catena Media, scheduled to assume his role on July 1st. Previously, Michael Daly resigned in February, leading to Cadena taking over temporarily. Moreover, the company recently named Michael Gerrow as its new group chief financial officer, a role which he will commence in mid-April. Edward Midolo has been elevated to the position of chief technology officer after being part of the company for six years. Additionally, a proposal has been made to instate Erick Flinck as the new chairman, a decision pending the outcome of the vote at Catena’s annual general meeting on May 15.
As part of its organizational refresh, Catena is shifting its lens towards technology and innovation, hoping to enhance user experiences through the development of new product offerings. With a sharpened focus on its key objectives, the company aims to strengthen its organic search business, refine existing products, expand its paid media division, forge strategic media partnerships, and plunge into new technological ventures, such as AI paid media and sub-affiliation.
The planned measures include a significant reduction in presence within unregulated or ambiguously regulated markets, alongside a pivot towards a higher mix of revenue share models over the current cost-per-acquisition dominated revenue model. This shift is intended to yield a more sustainable and stable revenue stream over the long term.
These changes follow the divestiture of Catena’s Italian operations towards the end of the previous year, marking the conclusion of a strategic review that commenced in May 2022. CEO Cadena has emphasized the necessity of these initiatives to propel the company forward, highlighting pillars of technology leadership, strategic product development, improved operational efficiency, and a diversified multichannel product structure.
To enhance agility and create value-driven products, Catena is overhauling its existing geography-based operating model in favor of one that is product-centric. This reorganization involves the management of key products as independent units, each equipped with distinct missions and financial and operational metrics to ensure accountability and optimal performance.
First-quarter figures are less than encouraging, with a significant revenue drop in North America, which suffered a sizable 71.9% decrease in sports betting revenue. Weaker operational performance and an underwhelming Super Bowl are notable contributing factors. Despite the downturn, there are signs of recovery as investments in two flagship US sites – Bonus.com and PlayUSA.com – begin to bear fruit.
Similarly, the rest of the world operations indicate a 34.6% decline in revenue, although the casino revenue remains relatively stable. In Japan, while performance at CasinoOnline.jp was affected by a prolonged site renewal, revenue at Slotsia doubled, cementing its position as the largest Japanese brand. Plans to grow Slotsia’s user base include expanding the offering, beefing up marketing efforts, and providing a multichannel user experience.
Most of Catena’s revenue came from cost-per-acquisition contracts, constituting 86.0% of the Q1 total, while 12.0% derived from revenue share agreements, and a smaller 2.0% was from fixed-fee revenues.
The decline in new depositing customers across the company was 40.6%, totaling 44,077, the majority falling within the CPA category. Overall spending and operating costs remained relatively flat, with personnel expenses being the largest outlay. After accounting for non-operating costs, the pre-tax loss for Q1 was €1.9m, marking a stark contrast from the €12.9m profit of the previous year. Notwithstanding these challenges, Catena Media remains resolute in its commitment to the newly-charted course, hopeful that the instated changes will lead to a brighter fiscal future.
