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Daly spoke on the call about the “ business cycle ” that Catena media works with “ and what this means for future growth and opportunities ”.
First , he said there is the launch cycle of new states in the US and new provinces in Canada . He noted that Catena had benefited from this cycle in 2022 , with a “ very healthy new state revenue growth ” with four states adding sports and one casino . But 2023 “ has been slower ” with just two markets opening thus far for sports and none for casino .
“ This does not mean this cycle is ending ,” he promised . “ Rather , it is at a low point of the continuing launch cycle with a greater series of waves ahead .”
He noted that there are two more upcoming launches this year with Kentucky and Maine while next year will see the “ significant state ” of North Carolina and Vermont added .
“ After this , the launch cycle is going to ramp back up probably in the 2025 timeframe as the US moves beyond election chaos and focuses on state budgets ,” he said .
“ More states than ever are talking about sports and casino bills ,” Daly added . “ Sports betting remains a very viable growth area for over half the United States , which sits at 52 % of states yet to regulate online sportsbook and will likely get as high as at least 80 %.
Casino , which he noted is of a “ larger value for both state coffers ” as well as for Catena , has “ 84 % of
“ The launch cycle is going to ramp back up in 2025 as the US moves beyond election chaos and focuses on state budgets ”
MICHAEL DALY , CATENA CEO
states yet to regulate ,” he said . “ We anticipate and are preparing for the mid to long game from many states to come .”
AIM IS TRUE
Still , for all that Daly spoke about being on the wrong end of current cycles , there was some scepticism from the analysts over the company ’ s target of achieving North American revenues of $ 125m in 2025 .
“ We set a target that is an achievable but challenging goal because that ’ s what we believe in ,” he said . “ It does involve a number of additional state launches over the period , such as North Carolina , which is expected in 2024 . It does involve a number of states in sports and a couple in casino .” That apparently includes the potential for New York to open in 2025 , something which looks like a distant prospect right now .
On top of that , he explained , would come additional media partnerships and further expanding into paid media areas that “ we know work and have decent margins ”. He added : “ We ’ ve been optimising the highest margin parts of our business and now it ’ s time for us to expand further . And so those are all parts of the plan .” Daly said that it was in North America where the company saw the potential for the “ highest return on investment market in the globe at this point ”.
“ We have a very significant cycle ahead in North America for casino and sports . We are optimising the business for that . It allows for a much more streamlined business than Catena Media has done in the past .”
He added that the affiliate space remained an “ extremely high-margin business compared to anything else we were doing anywhere else in the world ”.
So while there were other geos that were performing strongly for Catena , such as Italy , and others showing potential , such as LatAm , “ the North America focus is the focus for now ”, said Daly , who also strongly refuted one analyst ’ s suggestion that Q2 revenue falls indicated that this strategic shift was “ shrinking the business ”.
October 2023