Catena Media plc

I am Manuel Stan and today I'm joined by our chief financial officer, Mike Giroux. Today we will be sticking to our Q2 interim report, related financials and our strategy and outlook going forward. We will start today's presentation with a high level summary of the most important developments in the quarter. Q2 was a difficult quarter, which marked the pause from recent quarters of solid growth. Q2 reflected the structural challenges that traditional affiliation is facing related to the shifting dynamics of organic search. Q2 revenue amounted to 9.5 million euros. This represents a decrease of 1% versus the same quarter previous year and 23% down versus last quarter. Q2 revenue saw 4% year-on-year increase when adjusted for currency rate changes. The adjusted EBITDA was 1.2 million euros down 11% from 1.4 million euros the corresponding quarter last year. This meant a margin of 13% versus 14% the same period last year. The discipline cost management continued with a total cost base flat year on year at 8.2 million euros but down 15% from Q1 2026. The new depositing players increased 23% year-on-year, up to 24,781. From geographical perspective, the share of revenue coming from North America remains stable quarter-on-quarter at 97%, reflecting our focus on this geography. These challenges led the board and management teams to explore avenues for reshaping beyond traditional SEO affiliation. Moving on to operational developments. The quarterly revenue decline underlines the structural changes that traditional affiliates face in relation to shifting dynamics in organic search. This impact extends beyond Catena Media and the industry we are part of to every other industry reliant on organic search. Earlier this year, the board and management began exploring avenues for reshaping the business beyond traditional SEO affiliation. This will see Katina evolving beyond affiliation and lead generation into a technical infrastructure and intelligence platform provider. We have started developing this ecosystem as a next generation fully automated marketplace that connects advertisers and publishers across a wider set of verticals with deep analytics and intelligence at its core. The investment in this area began in Q2 and is reflected in the increase in capital expenditure. The thesis was validated through our successful marketplace program, which now contributes more than a third of group revenue. Moving on to organic search score. In Q2 of this year, organic search performance showed high volatility but was relatively flat year on year as our teams worked diligently to optimize rankings. The shift in user behavior essentially means the same rankings now convert into fewer clicks and less traffic than before. SEO will continue to remain a core part of the business and will continue to invest in and develop our core organic brands. We will continue to focus on brand loyalty and returning users and building traffic that is less exposed to search volatility. I will now hand over to Mike for an in-depth update on our financial performance.

Thank you Manu and good day. Looking into our Q2 financials, revenue was broadly flat compared with last year and a disappointing 23% decline from Q1 2026. Adjusting for a constant currency, revenue increased 4% versus Q2 2025. North America contributed 97% of group revenue during the quarter. Adjusted EBITDA was 1.2 million euros during the quarter. This was an 11% decrease versus q2 2025 and a 54% decrease versus q1 2026 equal to a margin of 13% compared with 14% last year and 22% in q1 2026. Operating cash flow is negligible during the quarter. New depositing customers increased 23% year on year. Compared to q1 2026 NDCs decreased by 28% in line with our fluctuating revenue. Overall, the quarter's performance was challenging and reflects the challenging market that seo based affiliates are facing. Moving on to our segment performance. In Q2 2026, our casino segment contributed 90% of revenue with the sports segment contributing 10%. Casino revenues grew 8% versus Q2 2025 to 8.5 million euros, but decreased by 22% versus Q1 2026. Regulated casino and sweepstakes casinos both grew despite the impact of the California ban that took place in January. Casino NDCs increased by 35% versus Q2 2025 and decreased by 28% versus Q1 2026. Adjusted EBITDA in the casino segment decreased by 18% versus Q2 2025 to 1.1 million euros and by 50% versus Q1 2026 equal to a margin of 13%. This reflects the year-on-year growth of market plays, offsetting the headwinds faced in our core SEO products. The sports segment revenues decreased 43% versus last year to 1.0 million euros and were down 32% versus Q1 2026. This reflects continued underperformance and the divestment of our esports business in late Q2 2025. New depositing customers decreased by 13% versus Q2 2025 and by 30% versus Q1 2026, which is seasonally to be expected. Adjusted EBITDA and sports increased to 100,000 euros from 200,000 euros from 20,000 euros last year, equal to a margin of 11%, but decreased by 100,000 euros versus Q1 2026. Continuing on to our cost development. The total cost base excluding depreciation and amortization was flat year on year at 8.2 million euros. This represents a quarter on quarter decrease of 15%. Direct costs increased by 25% versus Q2 2025 to 3.0 million euros. This reflects our progress in diversifying revenue to include a larger mix of performance marketing channels, including paid media, CRM and marketplace versus last year. Our direct costs decreased by 16% versus Q1, 2026 to seasonal variances in the marketplace business. Adjusted personnel and other operating expenses, excluding the revenue driven direct costs decreased by 11% year on year. personnel expenses decreased 9% versus Q2 2025 to 3.6 million euros and by 18% versus Q1 2026. But it's important to note that there was no short-term incentive accrual in Q2 due to the subpar performance. Whereas Q1 2026 included 750,000 euros Normalizing to exclude that accrual underlying personnel expenses were broadly flat versus q1 2026 at 3.6 million euros. we've included a Gray section in the chart to separate the incentive program accruals versus the continued decrease of fixed cost personnel expenses over the quarters. Other operating expenses decreased by 14% versus Q2 2025 to 1.6 million euros and by 7% versus Q1 2026. During the quarter, we continued implementing an administrative streamlining program that will yield the simplification of our legal structures and the liquidation of entities outside of Malta in the US. We recognized approximately 45,000 euros of items affecting comparability, which were primarily related to this program. Moving on to our financial position total operating cash flow from continuing operations was 0.03 million euros during the quarter compared to 1 million euros in Q2 2025. In Q1 2026 operating cash flows 4.4 million euros, which included a 2.3 million euro working capital inflow. For the first six months of the year, operating cash flow was 4.4 million euros up 5% year on year and 7.9 million over the last 12 months. We've also increased our capital expenditure by over 100% versus Q2 2025. This was driven by mentioned investments in product diversification and building our new infrastructure and intelligence platform. Our resulting cash and cash equivalence balance at the end of June was 13 million euros. We do not have any remaining debt instruments after the repayment of our senior bond in Q2 2025. The Q2 financial report included a letter from our chairman that clarifies our outlook for the hybrid capital securities, which I'd like to take the time now to reiterate. The hybrid capital securities are an equity instrument. They are not a debt instrument. Therefore, hybrid holders do not possess the standard rights associated with traditional bonds, including the ability to demand repayment or declare the issuer in default. The hybrid capital securities can be seen similar to a form of non voting preferred equity, where the preferred component gives the holders a priority claim ahead of the shareholders up to the nominal amount plus accrued and unpaid interest. The hybrid capital securities have a nominal value of 43.7 million euros and accrued interest of 7.0 million euros as of July 10th 2026. However, since they have no maturity date and no fixed payment obligation, the value is instead determined on how the price the market prices, the highly uncertain potential future cash flows. We expect to continue deferring interest payments on the hybrid capital securities to maximize flexibility for effective capital allocation. Due to the lack of liquidity in this instrument and numerous inquiries from investors, we announced earlier today our intention to voluntarily offer to buy back the hybrid capital securities at 20% of the nominal value. More information regarding this voluntary offer will be made available on our website. I'll now hand back over to Manu to give us an update on the strategy and outlook.

Thank you, Mike. We will now have a look into the strategy and outlook for the next quarters. With the start of the second half of the year, we have added a fourth pillar to our strategic focus areas, a performance pillar designed to emphasize the focus on automation and efficiency. From people perspective, the most important developments in the recent period included the employee net promoter score, which remains strong across Q2 as we recorded a 50 point year on year net increase. And after the quarter, we have consolidated our squads to sharpen the focus on core products and improve cross functional alignment and enabling faster decision making and clear ownership. From product perspective, some of the key developments included continued improvement to our Play Perks loyalty program with imminent rollout to other brands, launched Play Picks, our prediction market product in beta mode, fully agentic build, continued building the pipeline for Marketplace Plus, and PlayCanada.com passed to a strategic partner to unlock additional value in this market. Our third strategic pillar is profit. The adjusted EBITDA reached its lowest level since Q1 2025, signaling the challenges of the SEO-focused affiliation moment. The direct impact of organic search, new traffic, is also affecting the other performance marketing verticals. Capital expenditure increased as we scaled the investment in the new technical infrastructure and intelligence platform. The last and newly introduced strategic pillar, performance. New strategic pillar with focus on automation, agentic development initiatives continued in the quarter with promising results, Content and SEO automation workflows delivered during the quarter and automation initiatives across all areas of the business are currently in flight, forming a key part of our OKR framework. Moving on to North America market status. After the period, Alberta launched online casino and sports on July 13th. The first combined products launched as such since Ontario in 2022. This represents an attractive opportunity for the affiliate segment. The initial results recorded in the first month since launch are satisfactory. Prediction Markets emerged as a strong alternative in the sports vertical, accessible nationwide. We have launched our first dedicated initiative in this space Lastly, let us recap the key takeaways from our report. Revenue remained broadly in line with the same quarter last year, recording a marginal drop of 1% to 9.5 million euros down from 9.6 million. When adjusted for currency rate exchange, the revenue increased 4% year-on-year. The adjusted EBITDA saw a decline of 11% to €1.2 million, down from €1.4 million, the lowest level since Q1 2025. These results reflect the structural challenges that traditional affiliation is facing relating to the Earlier this year, the board and management teams began exploring avenues for reshaping the business beyond traditional SEO affiliation. This will see Catena evolving beyond affiliation and lead generation into a technical infrastructure and intelligence platform. We will share more details about this area in the following quarters as we approach a full commercial launch in the first half of 2027. We expect to continue deferring interest payments on the hybrid capital securities in order to maximize flexibility for effective capital allocation. We intend to launch a voluntary tender offer as detailed earlier in the corresponding press release. The shared buyback program of up to 5.98% approved to meet the company's commitments to its employee long-term incentive plan. Thank you very much for listening. I will now hand over to Mike to move on to the Q&A section of our call and open up for questions.

Thank you Manu. I'll now open it up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad.

Let's give it a minute here to see if there's any callers who want to ask a question. Alright, so I guess we'll proceed to some questions that we had submitted earlier on through the written procedures. So the first question that's coming to Manu is revenue fell 1% and adjusted EBITDA declined. How would you characterize Q2? Is the recovery over?

Thank you, Mike. Q2 was obviously a softer quarter after several strong ones and below the standard we have set for ourselves. While revenue was broadly in line with last year, and this is grew 23%, and the EBITDA margin was down year on year. This is obviously, as we said, the main cause is the headwinds in organic search. And as we announced, we are making some shifts in order to address that and position the business for a more sustainable future. Today's report sets all the measures, including, as we said about the new infrastructure intelligence platform. And I'm excited to talk about that in the most in the next quarters.

All right, thank you. The next question is, what exactly is the new platform that you're building? And is there more information about it?

Thank you. As I said, we're excited to talk about that more in the next few quarters. However, at this stage, for competitive reasons, we are disclosing few operational details. We will share more in the next coming quarters as we and we get closer to the full commercial launch in the first half of 2027. All we can say at this point is that we're developing a next generation fully automated marketplace that connects publishers and advertisers across a wider set of verticals with analytics and intelligence at its core and that we build on what we have already done with marketplace. Again, excited to talk more about this in the next quarter as we're approaching the 2027 launch.

All right, thank you. And the final question I think that's for you is, are you saying that the traditional SEO affiliation model is broken?

No, I think we're saying that the industry is changing and the user behavior, the way that users discover content is shifting And revenue from organic search is more volatile than it used to be. I think this is likely to continue. So we need to adapt to that. We remain committed to our organic brands. We continue to see these as important revenue contributors and we keep investing in them. But we need to reduce the dependency on SEO. Marketplace, as we said, already contributes more than a third of group revenues, which shows that we can actually provide the connected infrastructure between publishers and operators today. And this is the platform that we want to build on.

All right, thank you. And then there's a couple of questions that we have about the hybrid capital security. So I'll answer those. So the first question was, why are you continuing to defer the interest payments in the hybrid capital securities? And overall, any resumption on the timing is solely at our discretion of companies discretion. We do not intend to initiate interest payments anytime for the foreseeable future, as mentioned in our report. The purpose behind that is to maximize flexibility for capital allocation, including creating scope for investments that support the strategic opportunities and can deliver us revenue growth. And then a question about why are you offering to buy back the hybrid and how was the price set? And so overall over the past number of months, especially since we deferred the hybrid payments first about a year ago, we've had a number of inquiries from holders looking for a way to exit and there's very little liquidity in the instrument. So the offer simply opens a window for those who prefer to have cash today. The price reflects characteristics of the instrument. It is perpetual. It has no maturity date and there's no fixed payment obligation on the company. Interest payments are also deferred at the company's discretion. And there's no market where the hybrid holder can really sell in size if we look at the recent trading volumes. So the offer is completely voluntary and the full terms of the offer will be on our website with further documentation. Then we had another related question, which is why are you doing the capital securities tender offer and the share buyback at the same time? And overall, these are separate initiatives. I just want to make sure that that's understood. After the past year's operational and strategic turnaround, we have generated a decent amount of cash and the board of directors has finalized an updated long-term capital allocation plan that reflects our dual focus on growth and on shareholder value. The focus remains the reinvestment of cash flows into growth-oriented initiatives and in line of authorizations granted at our recent annual and extraordinary general meetings, the company will initiate a very limited share buyback program to support our long-term incentive plans. Further, as part of the updated capital allocation plan, the board has evaluated the company's outstanding capital securities And that's why we've issued the offer for those who are interested. The share buyback and the capital securities tender offer are made separately and they're not conditional on each other. And then I have one final question, which is what happens if I do not accept the hybrid offer? And quite a simple answer, which is that nothing changes. You keep the securities and the nominal amount, and you keep your claim to accrued and unpaid interest, which ranks ahead of the ordinary shareholders. And if there's any more questions on the hybrid capital security, I just got one that was written in. So this one came from Frederick sorry it's is it really a good idea to budget for hybrid offers at 20% when it seems unlikely that anyone would accept that amount, where the 20% come from and has anyone actually accepted the 20% offer pre offer. I'm not quite sure what the 20% offer pre offer means, but the 20%, as we were saying, came from the fact that we're offering a significant amount of liquidity versus the very small amount that is that is available presently on the exchanges. So from that perspective, we feel that it is a fair offer for something that does have a very undetermined future for certainty now. Then we have another question from Tony that says, can you confirm that Play Canada was divested and no meaningful impact from that? And I'll actually hand that one over to Manu.

Sure. Thanks, Mike. Yes, we can confirm that we have divested Play Canada outcome to one of our strategic partners in that market. That was the rationale behind that movement. No meaningful impact in terms of the divestment, but future positive impact from generating revenues from that market.

I think I've already answered the other question that just came in, which was the hybrid securities are trading at 60. This is not a fair offer. Please comment. I've already provided a response to that. So I think from that, I will shut down the questions for today and hand back over to Manu for closing remarks.

Great. Thank you, Mike. As we said, overall, the revenue remained broadly in line with the same quarter last year, recording a marginal drop of 1% down to 9.5 million euros. When adjusted for currency rate exchange, the revenue increased 4% year on year. The adjusted EBITDA saw a decline of 11% down to 1.2 million euros from 1.4 million euros last year. And these results do reflect the structural challenges that traditional SEO affiliation is facing related to the shifting dynamics of organic search. Based on that earlier this year, the board and management began exploring avenues for reshaping the business beyond traditional SEO affiliation. And this will see Katina evolving beyond affiliation and lead generation into a technical infrastructure and intelligence platform. We will share more details about this area in the following quarters as we approach a full commercial launch in the first half of 2027. We expect to continue deferring interest payments on the hybrid capital securities in order to maximize flexibility for effective capital allocation. And as we just discussed, we intend to launch a voluntary tender offer as detailed in this presentation. The share buyback program of up to 5.98% shares approved to meet the company commitment to its employee long in term long term incentive plan. With that i'd like to thank you all for joining today's call and looking forward to hosting you to our Q3 report on November 10 2026 Thank you very much.