Catena said the global economic situation dented performance in parts of its online sports betting and casino portfolio, just as the group had taken on extra costs to support new market launches and product upgrades.
To offset this impact, Catena reduced strategic investments from planned levels and while it did note an initial effect of these measures in Q2, it was insufficient to compensate for the full impact of lower margins, particularly under revenue share agreements with operators outside North America.
However, Catena chief executive Michael Daly said he remained optimistic about the future for the business, saying while margins will likely reduce in some markets, they will increase in others.
“Catena Media is an agile business with global reach in markets where the fundamentals for online sports betting and casino remain strong,” Daly said. “The changed economic environment will likely reduce user spending on entertainment in coming quarters, and we are pivoting aggressively to this new reality.
“Our priority is to continue to remove costs where we can and to adapt the business to lower margins in key markets while continuing to develop the many attractive growth opportunities ahead of us. People will still be betting, and we will be finding those new bettors and bringing them to the table for our partners.”
Revenue in the three months to 30 June 2022 amounted to €28.9m (£24.4m/$29.4m), down 4.9% from €30.4m in the second quarter of the group’s 2021 financial year.
Search revenue accounted for €27.3m of total revenue, down 3.9% year-on-year, while paid revenue also slipped 20.0% to $1.6m. Revenue from through revenue-sharing arrangements accounted for 39% of total revenue, with revenue from cost per acquisition contributing 52% and fixed fees 9%.
In terms of business segments, casino revenue fell 18.5% to €17.2m, despite growth in the North American market, though the launch of legal online sports betting in Ontario, Canada, helped push sports betting revenue up 31.3% to €10.9m.
Challenging market conditions in the financial sector meant that finance revenue in Q2 fell 20.6% to €773,000.
Turning to spending and operating costs were 26.6% higher at €25.2m, with the reduction in planned strategic investments not being fully effective in Q2. Catena also noted €2.5m in finance-related costs, meaning pre-tax profit was €1.2m, down 82.6% year-on-year.
The group paid €771,000 in income tax, while it also noted €682,000 in negative currency translation differences and a further €1.1m worth of interest payable on hybrid capital securities. As a result, it posted a net loss of €1.3m for the quarter, compared to a €4.3m profit last year.
In addition, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was 39.7% lower at €9.1m.
Looking at how this impacted its performance in the first half, group revenue for the six months to 30 June was €74.1m, up 4.2% year-on-year.
Operating costs also increased 22.7% to €48.7m, while also accounting for €2.4m worth of net finance expenses, pre-tax profit was €23.0m, down 12.6% from €26.3m last year.
Catena paid €1.7m in tax and reported €677,000 in negative currency translation differences and €2.2m in interest payable on hybrid capital securities. This meant it ended the half with a net profit of €18.5m, down 13.2% year-on-year, while adjusted EBTIDA declined 13.7% to €34.7m.
Publication of the results comes after Catena earlier this month expanded a strategic review of its business to include all of its European operations.
The initial review of specific parts of the business was announced in May in response to third-party interest in some of its brands. This attracted additional interest and extended the process beyond an expected time frame.
In response, Catena expanded the review to the entire European business, where it will be seeking cost reductions, including running a consultation process for redundancies in the UK and Malta.
“In fast-changing economic conditions we are working diligently to obtain the best outcomes for Catena Media and our shareholders,” Daly said.