Catena Media plc

Hello, and good morning. I'm Pierre Cadena, and I'm joined by our Chief Financial Officer, Mike Giroux. Today, we'll be speaking to our Q1 interim report, related financials, and our strategy and outlook. Q1 was a quarter of underperformance, with revenue from continuing operations totaling 16 million euros, representing a year-on-year decrease of 49%. Contributing factors include lackluster execution in our core operations, stronger competition, tightened marketing spending by operators, recent Google core updates that have adversely impacted the visibility and ranking of some of our sites, and a less favorable state launch rollout. in terms of the state launches in the quarter we did have two states launch online sports betting the first was Vermont on January 11th and the second was in North Carolina on March 11th the launch in Vermont was not materially impactful to our business given the relatively small population size in the state North Carolina however with an adult population of eight and a half million people And, you know, while it did not meet our expectations, it did provide a positive uplift for us, and it was our strongest performing state in Q1. To help position the company for improved results in the second half of this year and beyond, this quarter we announced significant internal and strategic changes. We began our shift from a geocentric operating model to one that will incorporate agile, product-focused teams with defined targets and operational and financial success. We are confident this alignment will help drive accountability and performance on a product by product basis. We've also strengthened our leadership across key functional areas such as technology, organic growth, SEO, and operations to help drive this transformation forward. Lastly, on the product and engineering front, we continue the development of our new technical platform and started to integrate it across our products. We expect a full rollout across our products to be completed in the second quarter of this year. Also in the quarter, I was appointed interim chief executive officer following the departure of Michael Daly in February. We also announced Manuel Stan will be joining us in July as our new chief executive officer. Upon Manuel's arrival, I will then step into the role of chief operating officer. Lastly, I am excited to announce that Mike Giroux was appointed to chief financial officer on April 15th. Mike has been with Katina for four years and is not only deeply familiar with how our business operates, but also aptly equipped to help push Katina Media forward as we transform the company for growth. With that, I will turn it over to Mike to present the financials in more detail.

Thank you, Pierre, and good morning. Moving into our financial analysis from a geographical split perspective, We concluded the quarter at €14.3 million in revenue in North America, down from €28.9 million revenue for the corresponding quarter last year. Adjusted EBITDA decreased to €5.4 million, 72% lower than last year, corresponding to a margin of 37%. Our North America revenue amounted to 90% of group revenue from continuing operations in the quarter. Looking at our segments, sports was down 70% versus last year. This was the main cause of our underperformance was driven by the increased competition, lower CPA rates in sports, and the addition of very difficult comparables with the Ohio and Massachusetts launches from last year. Our North American casino business was also down versus Q1 2023 by 15%. But it is showing signs of a turnaround of the 12% quarter on quarter growth versus Q4 of 2023. This quarter on quarter casino growth is a reflection of our aggressive program and measures currently underway to restore the business to profitable growth in the second half of 2024. Looking at the rest of the world, which mostly contains our LATAM business, esports, and APAC businesses, we saw a revenue of 1.7 million, a decrease of 36% versus last year. Adjusted EBITDA, however, increased by 58%, which can be attributed to streamlining the APAC and the remaining European operations, combined with profitable growth of the esports business. We are seeing profitable growth in the key products in this area, including Slotsia and our esports business. Continuing into our segment performance, we saw a very large decline in our sports revenue from 6.1 million versus 19.2 million in the previous year. Our casino revenue decreased by 20% versus the previous year. However, a sizable portion of that is attributed to historic revenue share players from our APAC and remaining European businesses. While our North American casino revenue decreased by 15% compared to last year, we are pleased to see the previously mentioned 12% growth compared to Q4 2023. With growth in most of our regulated states, this is an early validation of the turnaround strategies that are already underway. we are also continuing to see a positive impact in the casino segment from our broadened social and sweeps casino footprint this burgeoning sub segment is capitalizing on the slower than originally expected regulated casino launches in the various states giving us an opportunity for continued growth continuing on to our cost development technology, AI, sub-affiliation, media partnerships, and paid media. Pierre will touch on this in more detail in his outlook and strategy portion of the presentation. Costs in North America decreased by 7% and accounted for 63% of the total group call space from continuing operations. We had higher direct costs related to media partnerships signed in 2023 that were not active in Q1 of 2023. Not all of these partnerships have been profitable for us and are contributing to our negative sports EBITDA contribution. Prior cost savings initiatives helped offset our investments in AI and technological platforms. Items affecting comparability in the quarter were 1 million euros. We will focus on cost efficiency per product through this transformation initiative. Despite consecutive quarters of poor financial results, the receipts from proceeds of our divested assets through the strategic review continue to put us in a very healthy financial position. Net interest debt decreased by 56% to 10.1 million euro. We have a strong net cash position when including our future proceeds from divested assets. Our focus is to continue reducing debt and investing in strategic investments. Leverage is at 0.99 versus 0.44 last year. Looking at our capital structure, we currently have no outstanding financial commitments relating to prior acquisitions. Our cash balance at the end of the year was 23.4 million euros, and we were reporting a net debt of 10.1 million euro at the end of March. If we include future proceeds from divested assets, we have a net cash position of 11.9 million euros. As announced in January, we successfully completed a written procedure and partial repayment of half of the nominal value of our bonds. The total outstanding nominal value of the bond is 27.5 million euros, of which Katina Media holds 6.15 million. The bonds now have a maturity date of the 9th of June 2025 to be in line with our expected proceeds from divested assets. To date, scheduled payments for assets sold have been received according to plan. And with that, I will now hand back over to Pierre to give us an update on the strategy and outlook.

Thanks, Mike. The number of state and provincial launches in North America has decreased in each of the past three years with only four launches in 2023 and two launches in the first quarter of this year. Additionally, each of the six aforementioned launches have been for sports and none for casino. As previously reported, our business has historically been focused on launches and although North Carolina did present itself as a sizable opportunity, based on the adult population it is still smaller than that of ohio and massachusetts which launched in the first quarter of last year despite the activity of state launches in recent years there is still an exciting opportunity ahead as it fuels as it relates to future legislation i should say in fact the sports betting and casino opportunities are only 50 and 16 penetrated respectively representing additional upside in our total addressable market. This being said, we do not anticipate any further market launches in 2024, which is to be expected to some degree, particularly given legislative activity is typically slower in election years in the U.S., with activity regaining momentum thereafter. As such, we cannot rely on state launches to be the only driver of our growth in the upcoming quarters. We, you know, will be focusing our efforts to get more out of our existing products. Product development. I am confident our shift to a product-first, success-metrics-driven and outcome-oriented operating model, which I touched on earlier, will position us well to drive revenue organically, both at the top of the funnel with increased traffic and at the bottom of the funnel through optimized conversion. Additionally, we have seen recent success in turning around and optimizing some of our casino products, which Mike mentioned, and we will take our learnings and findings from these bodies of work and extend them to some of our core sports brands to drive results. Management changes. Earlier I spoke to how we are continuing to strengthen our leadership in key functional areas. This focus must go beyond the executive leadership team. We must have leaders and operators across our extended management team that have the passion, knowledge, and capabilities to execute and thrive in our product-led operating. Embedded at the center of this model will be a best-in-class data reporting and business intelligence function that will enable our product teams to be metrics-driven with clearly defined targets and definitions of success as their North Stars. Supporting these efforts will be our technology. In Q1, we started integrating a new in-house developed platform into our owned and operated sites. And we expect the rollout will be completed in Q2. Once so, we'll be able to efficiently serve ads and other monetization features and deploy call to action across our sites via a single platform. Thereafter, in subsequent quarters, the platform will continue to evolve as our product and engineering teams introduce additional features and functionality. We previously reported momentum with our AI joint venture, which was established in Q4 last year. We successfully launched the MVP version of our AI platform in Q1, and we are now in the eighth week of our go-to-market plan. The platform is currently integrated into two of our sites, assisting our content teams and reducing the time it takes to produce, edit, and publish domain authoritative content. It's still early, of course, but we are seeing healthy leading indicators for site sustainability, content creation efficiency, and SEO metrics. We are also on track to launch in the second quarter a new platform that will help accelerate our efforts to reach a new cohort of sports bettors and casino players through sub-affiliation. Once complete, our operator partners will also see utility benefits in the form of more robust and automated compliance, reporting, invoicing, and payment workflows. Lastly, media partnerships. We will continue to grow, optimize, and expand our media partnerships this year. We have the luxury of bringing deep content and SEO expertise in addition to our learnings from existing and previous partnerships to maximize value for Katina Media and our media partners. Key takeaways. We experienced lower revenue in North America due partly to increased competition and lower marketing spending by operators. The revenue impact was strongest in our sports segment, and we have measures underway to address this underperformance and return to growth. We've seen initial signs of improvement in our casino segment, which generated a 12% increase in revenue quarter on quarter. Organic growth is expected to resume in the second half of this year with full year adjusted EBITDA still expected to be in the range of 20 to 30 million euros. This is expected to be driven by continued growth in our casino products, more profitable media partnership operations, the rollout of our technology platforms and a turnaround of our flagship sports products significant ongoing technology product and ai investments are ongoing and the launch of a new technical platform will be fully integrated into all of our sites in q2 which will drive operational efficiencies and help pave the way for new products like ai sub-affiliation and paid media we'll now open it up for questions