Catena Media plc

Welcome to Catena Media's Q4 Interim Report. I am Manuel Stan and today I am joined by our Chief Financial Officer, Mike Gero. Today we will be speaking to our Q4 Interim Report, related financials and our strategy and outlook. We will start today's presentation with a high level summary of the most important developments in the quarter. During the quarter, we have continued to improve our profitability as we saw a second consecutive quarterly improvement while reaching the highest adjusted EBITDA margin since Q3 2023. This was the result of the team's continuous efforts on efficiency across the entire organization. The revenue side, however, remained under pressure as measures to focus the group on new strategic priorities and gaining traction more slowly than anticipated. From people perspective, we continued the work on implementing and refining our new product focused operating model. To improve the alignment and accountability across the organization, we have implemented an objective and key result system, OKR. While this may sound like a basic step, it is fundamental in aligning all personnel around our key priorities and ensuring the focus of the highest impact areas. Another highlight in the quarter was the exclusive collaboration with Daily Racing Forum, a blueprint for such strategic media partnerships that we are seeking. During the quarter, we have discontinued the AI content generation platform joint venture and recovered 0.7 million euros of the original investment. We continue to see AI as an important business enhancer, for example, in scaling up content output and quality, However, the new board and management did not deem this particular venture to be the optimal way to realize the opportunity. We have achieved a positive net cash position in February 2025 after the receipt of the final payment from the Ask Gambler sale. This cash will be used to repay the senior bond in June 2025. Moving on to the financial summary. Q4 revenue from continuing operations was €10.2 million, down 30% from the previous year and down 5% from the previous quarter. Adjusted EBITDA was 1.5 million euro, up 2% from the previous year and up 13% from the previous quarter. Adjusted EBITDA margin was 15% up 5 percentage points from the previous year and 10 percentage points up from Q2 2024 and the highest level since Q3 2023. North America contributed 87% of the group revenue, up from 85% in the same period last year. From segment perspective, sports remains challenging with continued underperformance in Q4, negatively affecting our quarterly margin. North American casino revenue decreased 12% year-on-year. However, we maintained a healthy margin for this segment. Mike will go into further details regarding the geographical and segment results later in the presentation. In the Q2 report, we started showcasing our average ranking score for the 70 plus most important keywords across Catena Media's owned and operated products. The core of the keywords remains mostly unchanged, but factors like seasonality, new segments, or new markets may result in changes to the list. After the core algo update, after Google's core algo update in August, September, Google had unexpected back-to-back updates in November and December. This resulted in a higher than normal volatility during the quarter. At the end of the period, our average score was 5.35, the highest, meaning the worst score since we started measuring and reporting this indicator. However, it's important to look at the score throughout the quarter at the end of the quarter, as at the end of the quarter, the number is not necessarily representative for the entire quarter. On a positive note, we can see that while Google's core updates may have had an initial negative impact on some of our products, we are generally able to identify solutions and recover the rankings. I will now hand off to Mike to give an in-depth update on our financial performance.

Thank you, Manu, and good morning. Moving into our financial analysis from a geographical split perspective, we concluded the quarter at 8.9 million Euro in revenue in North America, down from 12.3 for the corresponding quarter last year, and down 6% from the 9.5 million that we saw in Q3 2024. Adjusted EBITDA in North America increased to 4.5 million, 4% higher than last year, corresponding to a margin of 51%, a 15 percentage point increase versus last year. Adjusted EBITDA is marginally higher than Q3 2024, despite €600,000 lower revenue in the quarter, reflecting the effectiveness of our cost management programs. North America amounted to 87% of group revenue in the quarter, an increase of two percentage points from last year. Looking deeper at our North America segments, sports was down 56% versus last year. This poor performance was driven by increased competition and to a lesser extent, the lack of a comparable state launch. Kentucky launched at the very end of September, 2023 and had a trailing effect extending into October, 2023. Our North America sports business grew by 6% versus Q3 2024. While this is not as much growth as we would have liked to see in the quarter, there's a welcome shift from seasonally adjusted sports declines in recent quarters. Our North America casino business decreased by 12% versus Q4 2023. This was also a contraction of 9% versus Q3 2024. caused by competitive pressures driven by the volatile search rankings experienced through multiple Google core algorithm updates. Looking at the rest of this world, this non-core geographical segment accounted for 13% of revenue and contains our esports, APAC, and Latin America businesses. We saw revenue of 1.3 million euros, which is a decrease of 41% versus last year. Adjusted EBITDA decreased by 31% versus last year. However, our margin increased to 50% as we decreased costs to align with the revenue trends. Moving into our full company segment performance, we saw a very large decline in our sports revenue to 2.5 million euros versus 5.7 million euros for Q4 2023. NDCs also decreased in sports by 45%. As mentioned previously, this was driven by underperformance at several brands and challenging comparables from the Kentucky launch at the very end of September 2023, which extended into October 2023. Our sports business grew modestly by 2% versus Q3 2024. As mentioned earlier, the North America sports business actually grew by 6%. However, declines from our esports business and revenue share churn from remaining European assets impacted the overall segment growth. Losses in our sports business decreased by 42% versus last year as cost control measures took effect. We continue to invest adequately in this segment to turn it around and return to profitability. The casino segment accounted for 75% of group revenue. Revenue decreased by 15% versus the previous year, while NDCs increased by 11%. The rest of world business, which is primarily legacy revenue share from non-core assets decreased by 39% versus last year. The North America casino business decreased by 12% versus last year. This minor yet disappointing decrease was a result of the tumultuous quarter with very volatile search rankings. Casino margins decreased by 3% versus the same quarter in 2023. the impact of our cost management programs maintained relatively high margins despite the 15% decrease in revenue. And despite a 7% quarterly decrease in casino revenue, the casino segment margin actually improved by two percentage points versus Q3 2024. That preserved margin can be attributed to our continued cost management programs. Continuing on to our cost development, We further decreased our cost base in Q4 2024 by rolling out the new operating model, implementing cost management programs, and terminating unfavorable media partnerships. Our adjusted cost base decreased by 33% versus Q4 2023, and 7% versus Q3 2024. Our adjusted EBITDA margin for Q4 2024 landed at 15%, increasing for two consecutive quarters from our low of 5% in Q2 2024. We feel that we now have the right size cost base to fuel sustainable organic growth in 2025. We do not anticipate any further major changes to our cost base at this time, but we do expect direct cost to fluctuate alongside the profitable growth of our media, our paid media, sub-affiliate, and the newly reset media partnerships over the next few quarters. Total items affecting comparability were 800,000 euros in the quarter. The vast majority of these were associated with restructuring redundancy costs, including those associated with the previously announced headcount reductions. Moving on to our financial position, despite another consecutive quarter of minimal cash flows from operations, the receipts from proceeds of our divested assets through the strategic review continue to put us in a healthy financial position. We decreased interest costs by repaying the outstanding 10 million Euro balance on a revolving credit facility in Q4. And our only remaining debt is the unsecured senior bond, which is due in June, 2025. All proceeds from divested assets have been received on time, including the final payment associated with the Ask Gamblers divestment, which arrived in early February, 2025. As a result, the company is now in a net cash position, excluding the hybrid capital securities, which do not have a maturity date. We'll use current cash and the remaining outstanding proceeds from divested assets to repay the senior bond due in June, 2025. If we now look at our capital structure, our cash balance at the end of the quarter was 8.5 million Euro. We reported a net debt of 12.9 million Euro at the end of December. This puts us in a net cash position at the end of the year of 5.6 million euros, excluding the hybrid capital securities. After adjusting for scheduled inflow of 18.5 million euro in divested proceeds during Q1 and Q2, and as mentioned previously, 15 million of those proceeds have now actually been collected. So we're already in a net cash position. It is important to note that the final proceeds from past divestments are not conditional on any performance targets and all payments to date have been received according to plan. We will use our net cash position upcoming proceeds from past divestments to repay the senior bond due in June. We currently have no outstanding financial commitments relating to prior acquisitions. I will now hand back over to Manu to give us an update on the strategy and outlook.

Thanks, Mike. We will now have a look into the strategy and outlook for the next few quarters. During the quarter, we have not had any US state launches, meaning that the overall market penetration remains at approximately 50% for online sports betting and only 16% for casino, indicating a remaining sizable future opportunity. In 2025, we expect two new market launches in North America. Missouri, following the November 24 ballot vote, Missouri Gaming Commission is drafting the online sports wagering regulations and the market is expected to go live sometime in the second half of the year. Alberta, the legislation is expected to be introduced in the spring of 2025 with no launch date set yet. Alberta will have a model similar to Ontario, including both online sports betting and online casino. Lastly, other casino bills recently introduced include New York, Indiana, and Illinois, but these are still in the very early stages with less chances to succeed. As laid out in the previous reports, our current strategy is focused on three key pillars, people, product, and profit. From people perspective, the key initiatives in the quarter include the implementation of an OKR system meant to create alignment and accountability across the organization, the strengthening of our leadership team with key hirings, such as directors of data, director of SEO, director of engineering, the streamlining of the content organization, resulting in a net reduction of the group's headcount of more than 10%, and the initiation of a return to office hybrid program, which will be fully implemented in the second half of the year, and will focus on two hubs, our existing European hub in Malta and a newly created North American hub in Miami. From product perspective, we have continued to focus our efforts to align with Google's best practices and improve the performance and accessibility of our products. We secured an exciting exclusive partnership with the Daily Racing Forum to bring best-in-class sports betting content and promotions to the DRF customers. This is a great example of the type of strategic partnerships we are seeking to build, one that is designed to drive sustainable profitability for both parties. We further enhanced our CRM capabilities, allowing us to build an engaged and loyal customer database. And we have discontinued the AI content generation platform joint venture and recover 0.7 million Euro of the original investment. We continue to see AI as an important business enhancer, for example, in scaling up content output and quality. Our third and last strategic pillar is profit. We are pleased with the second consecutive quarter of improved profitability as our adjusted EBITDA margin reached the highest level since Q3 2023. The cost reduction measures implemented during the quarter are expecting to generate an annual cost saving of 2.2 million euros. The cost base was reduced by 33% from Q4 2023. And we are confident we have right-sized the cost base to fuel sustainable organic growth in 2025. Lastly, let's recap the key takeaways from our report. First, we are pleased with the second consecutive quarter of improved profitability as our adjusted EBITDA margin reached its highest level since Q3 of 2023. However, ongoing focus to stabilize the revenue levels as the return to growth will take additional time. continued implementation of the new product-led operating model with clear focus and priorities. Regulation in North America remains slow, with very few expecting new states or province openings in 2025. Focus on growth in existing geographies and products. And lastly, we are now in a positive net cash position, excluding the hybrid capital securities, which we achieved after the 15 million euro receipt of the final payment from the S Gamblers sale. Thank you very much for listening. I will now hand over to Mike to move on to the Q&A session of our report and open up for questions.