Part 2: The changing affiliate landscape
Chart 5: Catena Media quarterly adjusted
EBITDA (€m) Q116-Q318
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13.6
12.4
12
12.1
11.1
10
9.5
8
7.6
6
4
5.3
6
8
6.5
4.3
“There are very few properties we would like to
acquire,” he added. “There are a lot of things that
would like to sell, but not in a way that would suit
our portfolio. Now we are targeting larger assets
– single brands, or fewer brands at least. A single
brand, with a clear focus, has all the benefits but
there are very few of these out there now. We have
bought a lot. We are looking; we still see 50 or 60
cases a month. We turn down a lot.”
2
The analyst view
0
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Source: Company
for the year-to-date stood at €38.1m. This is already
ahead of the 2017 total of €36.2m and estimates
by analysts at ABG Sundal Collier in Stockholm
suggest the total will be €51m for this year.
They estimate a revenue contribution from the
US of about €32m in 2020. Given subsequent
company comments, this is likely to be an
underestimation.
A pivot
The advent of the US opportunity is one reason
why Catena Media’s focus has so clearly changed
over the course of this year. The comment
regarding value versus volume in NDCs could
also go for the company’s overall strategy. Where
previously Catena was keen to talk about the 4,000
or more sites it was accumulating and processing
through its bespoke content management system,
now it says it has whittled that total down to
around 1,200.
Moreover, its focus is now on 30 or 40 brands
that are its major revenue generators, and which
the company says account for about 80% of its
total revenues.
Alongside this switch in focus comes what
would appear to be a major shift in M&A emphasis.
As mentioned, the company has not made an
acquisition since the ASAP Italia deal in July, and
while Hellberg paid lip service to the continued
search for opportunities, there can be little doubt
that M&A is no longer the focus it once was.
“We are now focused on growing organically by
geographic expansion and selected acquisitions,”
Hellberg told the Capital Markets Day audience.
16
Analysts at ABG Sundal Collier in Stockholm issued
a note of Catena Media in mid-November. Looking
at the company’s third-quarter performance, they
put the case for why the shares might see a boost
in 2019.
• The US: Higher than expected scalability in
relation to the current and expected expansion of
regulated gaming states.
• M&A: A slower pace of acquisition activity will
lead to lower depreciation and amortisation
charges.
• Stronger stock performance: The lower-than-
expected dilution from using shares in any M&A
deals.
These factors mean that analysts have revised their
earnings-per-share estimates for the years 2019 and
2020 by 13% and 15% respectively. “The confidence
in our estimates has increased, as we have looked
more into the numbers for the expected US
expansion. We think slower growth and challenging
regulatory changes in Europe can be offset by the
contribution from the US journey.”
Under pressure: Regulation and the evolution of affiliate marketing
Now we are
targeting larger
assets – single
brands, or fewer
brands at least
Per Hellberg, CEO