iGB-Affiliate-Monitor_FEBRUARY 2022 - Page 13

CATENA MEDIA THIRD QUARTER REVIEW
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CATENA MEDIA THIRD QUARTER REVIEW
THE BARBELL OF REGULATION
The balance to be struck between making money from regulated betting and gaming markets such as the US and unregulated jurisdictions is always tricky . The fact remains that in unregulated markets one of the easiest routes to market for operators opting to go down the grey road is affiliate marketing .
Hence , while Catena Media rightly talks about the progress it is making in the regulated betting and gaming space in North America right now , it also has to point to the money it is making in Japan where online gaming is currently outlawed .
So , while the US accounted for € 16.8m of total revenue in the third quarter or a little over 50 % of total revenues , Japan was worth 9 % after having doubled year-on-year . And much as with the European business – where growth is harder to come by – the importance of Japan is accentuated because the business is revenue-share driven as opposed to the CPA landscape in the US .
As CEO Daly put it on the third-quarter earnings call , “ North America continues to flourish and grow and the pendulum will continue to swing towards the region ,” but the company ’ s global team are “ also working hard to keep some balance ”.
Yet , a reliance of revenues from inherently unstable regulatory situations can be problematic , as Catena Media has found recently to its cost in Germany . The introduction of the new interstate treaty has hit those reliant on the grey market there , from operators
Chart 4 : Catena Media revenue Q419-Q321 (€ m )
€ m
45
40
35
30
25
20
15
10
5
0
26.6 26.7
Q419 Q120 Q220 Q320 Q420 Q121 Q221 Q321
Source : Company reports
27.8 24.9
26.6
40.7
30.4
33.1 to affiliates , and the third-quarter results for Catena display the ongoing impact .
Germany now only represents 4 % of group revenue having been much higher previously . But with the new regime all but wiping out the previous gaming activity , it means revenues from the market have been on the slide , to the extent that Catena Media ’ s organic growth rate ex-Germany would have been 11 percentage points higher at 34 % as opposed to the actual rate of 23 %.
Previous to the quarter , Catena Media had already announced it was writing down the value of the German-facing assets acquired in 2017 to the value of € 42.8m ( and at the same time writing down € 6.6m related to the value of some of its French-facing assets .)
Daly said that Germany would be a “ very small factor in our growth going forward ”. It was the initial impact of the German situation in the summer that lay behind the 25 % fall in revenues between Q1 and Q2 .
As can be seen in chart 4 , after reaching revenues of € 40.7m in the first quarter of 2021 , the total fell back 25 % to € 30.4m . The quarteron-quarter rise back to € 33.1m at least clawed some of that back , producing an 8.9 % rise . The impact was even more pronounced in the EBITDA numbers , and as with
February 2022