Catena Media share price plummets on falling Q3 revenue

Catena Media has recorded a 6% decrease in Q3 revenue year-on-year (YoY) as the affiliate struggles to balance mitigating factors across its casino and sports segments.

The Stockholm-listed firm noted revenue of €24.9m (£22.3m) for the reporting period, down from €26.4m in Q3 2019.

Casino accounted for 64% of total revenue (€16m), while sports represented 30% (€7.5m). The remaining 6% of revenue was derived from the firm’s financial services arm.

Catena highlighted that its European casino segment had been negatively impacted by Google’s major update to its search and ranking algorithms at the beginning of May.

The affiliate said the decline in revenue development had started to resurrect itself towards the end of Q3 but no post-period trading update was provided.

Conversely, Catena pointed towards impressive casino segments in Japan and the US, while its AskGamblers brand achieved its second-best month ever in July.

Late starting domestic football seasons in England, Germany, Spain and Italy all impacted revenue, according to the affiliate firm.

However, Catena noted that heading into Q4 sports revenue figures had started strongly with average daily revenue well above that of September.

Elsewhere, the group’s EBITDA for Q3 2020 rose 7% YoY to €12.2m while its number of new depositing customers fell by 5% to 94,710.

Catena Media CEO Per Hellberg said the firm was looking to lean on its US-facing brands to drive revenue in the future, with the market representing 30% of total revenue in Q3.

Hellberg said: “We see a potential for our US business to generate the same amount of revenue as the entire Catena Media group does today. But it’s up to state legislators to decide when such potential is unlocked for us, so the timing is unpredictable.

“We will, however, intensify our investments in the US in order to ensure a continued dominant position in any state going live at any time. And we will probably not have to wait long for additional states to go live, so we foresee significant action already in 2021,” he added.

Hellberg went on to say that Catena will continue to navigate upcoming regulatory headwinds in Europe, with the group fully focused on its long-term growth.

Hellberg said: “The upcoming German legislations taking effect in July 2021 is another issue, and we have already taken actions to mitigate it. Our focus, however, remains unchanged: short-term disruptions do not impact our long-term strategy and growth potential.”

Catena Media’s share price dropped by more than 14% in early trading.

To appease investors, the firm said net cash generated from operating activities in the region of €300-€370m will be used for dividends, and/or share buy-back programmes, as well as strategic M&A.