Catena Media plc

Good evening, everyone. Welcome to Catena Media's Q1 Interim Report. I am Manuel Stan, and today I am joined by our Chief Financial Officer, Mike Giroux. Today, we will be speaking to our Q1 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. Q1 showed a continued underperformance across both casino and sports segments, resulting in a 3% revenue decline compared to Q4. The adjusted EBITDA margin fell to 9% after two quarters moving in the right direction. On the back of the poor performance, we have taken significant measures to streamline operations and cut costs. These measures include flattening the organization by removing a senior management layer, plus review and removal of certain external services. The elimination of more than 50 roles across the organization, estimated to generate annual cost savings of 4.5 to 5 million euro. And the consolidation of our tech stack, expected to generate annual cost savings of more than 0.8 million euro. On the positive side, during the quarter, we continue to see improved performance in our efforts to diversify the group's revenue streams, which include segments like sub-affiliation and CRM. Moving on to the financial summary. Q1 revenue from continued operations was €9.8 million, representing a 39% year-on-year decline and a 3% quarter-on-quarter decline. While the decline remains disappointing, the level is signaling that the steep declines of past quarters are now behind us. Looking forward, the year-on-year comparables in the next quarters will improve. The adjusted EBITDA was €0.9 million, down 3 percentage points from the same period previous year. This was a disappointing step down after having previously reached the highest level in five quarters in Q4 2024. However, with the recent measures mentioned above, we are confident we will continue to see solid profitability improvements in the next quarters. North America contributed 89% of the group revenue, marginally down from 90% the previous year. From segment perspective, sports decreased 69% to 1.7 million euros. While the poor performance remains the chief reason, tough yearly comparables including market launches and media partnerships also play a significant role in the yearly decline. North American casino revenue decreased 20% year-on-year, however recorded a marginal 2% quarter-on-quarter increase. Mike will go into further details regarding the geographical and segment split results later in the presentation. Organic search score. Last year, 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. The list has been updated during Q1. At the end of Q4, we saw back-to-back Google algorithmic updates, which had impact on the rankings and performance heading into Q1. The high volatility continued in Q1, as you can see in the graph on this slide. At the end of the period, our average score was 6.22, the highest, meaning the worst, score since we have started measuring and reporting this indicator. While this is suboptimal, we are pleased to see that the positive direction at the end of the quarter.

will now hand off to mike to give an in-depth update to our financial performance thank you manu and good evening moving into our financial analysis from a geographical split perspective we concluded the quarter at 8.8 million euro in revenue in north america down from 14.3 million for the corresponding quarter last year and relatively stable with a 1% decrease from the 8.9 million that we saw in Q4 2024. It is important to note that we have achieved greater data granularity through this quarter and therefore we've reclassified our geographic costs and are now allocating more costs to the operational regions versus shared central services. This applies the entire 2024 comparative period and a detailed workbook is now available on our website with the changes. Adjusted EBITDA in North America decreased to 3.4 million, 11% lower than last year, corresponding to a margin of 39%. This is a year-on-year 12 percentage point increase in our North American margin. Adjusted EBITDA is 31% higher than Q4 2024, despite relatively flat revenue in the quarter, reflecting the effectiveness of our cost management programs. North America amounted to 89% of group revenue in the last quarter, a marginal decrease of 1% versus last year. Looking at our North America segments, sports was down 69% versus last year. This poor performance was driven by a lack of comparable state launch in 2025, as North Carolina launched in March 2024, and also the increased competition that we've been seeing over the last 12 months. Our North America sports business declined by 12% versus Q4 2024. Some of this shift is expected with seasonality, but it was still a disappointing result showing that much work and investment is needed to bring our sports business back into profitability. Our North America casino business decreased by 20% versus Q1 2024. This was an underwhelming increase of 2% versus Q4 2024 as competitive pressures driven by the volatile search rankings continued to affect our results. Media partnerships also played a role in the year-on-year revenue declines across sports and casino, as these were not adversely affected by the Google algorithm update until mid Q2 of 2024. Looking at the rest of the world, this non-core geographical segment accounted for 11% of revenue and contains our Esports, APAC and Latin America businesses. We saw revenue of 1.1 million euros, which is a decrease of 37% versus last year. Adjusted EBITDA decreased by 22% versus last year. However, our margin increased to 55% as we decreased costs to align with the revenue trends. Moving on to our full company segment performance, we saw a very large decline in our sports revenue to 2.1 million euros versus 6.1 million euros for Q1 2024. NDCs also decreased by 69%. This was driven by underperformance at several bands and challenging comparables from the North Carolina launch in March, 2024 and the year on year effect of exiting certain media partnerships. Our sports business declined by 12% versus Q4, 2024 with declines across the North America and the rest of the world brands. Losses in our sports business decreased by 7% versus last year as cost control measures took effect. We continue to invest adequately in the segment to turn it around and return to profitability. The casino segment accounted for 78% of group revenue. Revenue decreased 23%, but we had very active media partnerships through Q1, 2024. Casino revenue is flat versus Q4, 2024. The rest-of-world business, which is primarily legacy revenue share from non-core assets, decreased by 44% versus last year. The North America casino business decreased by 20% versus last year. Adjusted EBITDA in the casino segment decreased by 34% versus the same quarter in 2024, with a smaller margin decrease of 5 percentage points owing to our cost management programs. Moving on to our cost development. I'd like to start off the discussion on our cost development around some reclassifications in our financial statements that affect the current and past periods. We strive to provide accurate and transparent financial information and have made great progress in improving our financial data granularity over the past few quarters, following the implementation of our product-led operating model. The changes that we have made are that individuals providing full-time services to the group, like outsourced software engineers, have been reclassified from other operating expenses to personnel expenses. Direct costs associated with media partnerships have been reclassified between sports and casino based on the percentage of revenue each partnership generated. This means that our Q1 and Q2 2024 sport and casino margins have changed significantly. And the last reclassification was that our shared product related costs like senior manager salaries or generic software subscriptions have been reclassified to North America and rest of world in our segment note. This provides a more balanced view of our administrative and corporate costs in the current and comparable periods. While the reclassifications have no impact on our total cost base, we made these changes to be back to January 2024 in the spirit of consistency and transparency. For your convenience, our website has been updated to include a detailed workbook comparing the original tables to our reclassified values. Continuing on to our Q1 cost development and taking into consideration the reclassifications mentioned previously, Our adjusted cost base decreased 62% versus Q1 2024 and increased 3% versus Q4 2024. Our Q1 2025 direct costs increased by €300,000 versus Q4 2024 as our sub-affiliation business grew. This increase was partially offset by lower other operating and personnel expenses. Following our Q4 report, we stated that we did not anticipate further major changes to our cost base at that time. Unfortunately, we did not see the growth or progress in leading indicators that we expected, and we've since announced significant cost cuts focusing on our personnel expenses that will result in reductions of 4.5 to 5 million on an annualized basis. Total items affecting comparability in the quarter were €350,000. The vast majority of these are associated with restructuring and the previously committed share-based compensation adjustments. Moving on to our financial position. After another consecutive quarter of minimal cash flows from operations, it's added extra pressure to our financial position. The proceeds from previously divested assets have ensured that we remain in a position to repay our senior bond in June, but we are not generating sufficient cash from operations to continue paying the high ongoing interest costs associated with hybrid capital security at this time. As mentioned in a press release earlier today and in our chairman's comments in this interim report, we do not intend to redeem the hybrid capital security in the short term. Additionally, we plan to defer the interest payments on this instrument. Excluding the hybrid capital security, we had a net cash position of 3.2 million euros after taking into consideration our previously repurchased senior bonds. We are intending to cancel the repurchased bonds held by Catena Media and repay the remaining senior bonds or redeem them on schedule in June. Looking into our capital structure, our cash balance at the end of the quarter was 24.6 million euros. We reported a net cash position of 3.2 million euros at the end of March, excluding the hybrid capital securities, which do not have a maturity date. It is important to note that the final proceeds from one remaining past divestment is not conditional on any performance targets and all payments to date have been received according to plan. We intend to use our net cash position in 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.

Thank you, Mike. We'll now have a look into the strategy and outlook for the next quarters. Another quarter without significant regulatory movements in North America, with overall market penetration remaining at approximately 50% for online sports betting and only 16% for online casino, indicating the remaining sizeable future opportunity. In 2025, we expect two new market launches in North America. Missouri, following the November 2024 ballot vote, the Missouri Gaming Commission is diligently proceeding towards market launch, and the market is expected to go live sometime late Q3 or Q4. Alberta is expected to legalize online sports betting and casino this year, but no clear market launch date is set yet. Alberta will follow a model similar to Ontario, including both online sports betting and online casino. Moving on to our strategic focus areas. 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 during the quarter include right-size the organization by eliminating more than 50 roles, flattening the organization by fully removing a senior management layer, continue to focus on building our hubs with our Malta hub now hosting approximately 50% of our workforce, and hybrid office presence is planned for the second half of the year in our hub locations as previously announced. From product perspective, the key initiatives include continue to develop on our sub-affiliate vertical based on the strong demand from both operators and affiliates, further improve our CRM capabilities and expand our casino database to best position our brands for future casino state launches, and focus on our flagship brand, Bonus.com, which has seen positive signs towards the end of the quarter. Our third and last strategic pillar is profit. First and foremost, we are disappointed to see a profitability decline after two quarters of consecutive progress. The measures implemented as a result, including rightsizing the organization and the tech stack consolidation, are expected to generate total annual cost savings of around 5 to 6 million euros. The management is confident these measures will have a significant impact in the coming quarters. Lastly, let's recap the key takeaways from our report. Revenue declined 3% quarter-on-quarter, signaling stabilization in our core North American market. Therefore, we don't expect to reach double-digit revenue organic growth in 2025, but we expect to reach double-digit growth in group-adjusted EBITDA for the year. €3.5 million from divestment proceeds expected by the end of May. Net interest bearing debt, excluding hybrid capital securities, expected to be cleared in June 2025 with the repayment of the senior bond. Interest payments on the hybrid capital securities to be deferred starting in July. Regulatory progress in North America remains slow with no significant development during the quarter. We continue to see encouraging progress in the areas focused on diversifying revenue streams, such as sub-affiliates and CRM. And last but not least, significant cost measures taken across the organization, the elimination of 50 plus roles, and the tech stack consolidation resulting in total annual cost savings of 5 to 6 million euros. Thank you very much for listening to our today's presentation. I will now hand over to Mike to move on to the Q&A session of our report and open up for questions.