In a recent trading update, Catena Media revealed that Google’s algorithm changes, introduced in May, will impact the effectiveness of some of their strategic media partnerships. The affiliate marketing group noted these changes will negatively affect the rankings of sports betting and casino content on major news media websites.
Catena Media reported that the Google update would reduce revenues and increase direct costs for some of its media partnerships. However, there has been a positive offset with higher traffic and improved organic search rankings for some of Catena’s owned and operated brands. Steve Ruddock highlighted the potential negative impact of Google’s changes at the start of May.
Catena Media now expects second-quarter 2024 revenue to range between €12.5-€13.5 million. Adjusted EBITDA is projected to be between €0.5-€1.5 million. The group remains optimistic about a return to revenue growth in the second half of 2024 but has withdrawn its previous full-year adjusted EBITDA forecast. Due to the Google changes and Catena’s new operating model announced last month, the company will not issue new guidance at this time.
Strategic Adjustments and Future Outlook
Catena Media mentioned that some lower-margin media partnerships, which account for over €1.4 million per quarter in minimum guarantees, will expire by the end of Q3. These partnerships are treated as direct costs in Catena’s financial statements. Additionally, internal and outsourced content costs will decrease by up to €1 million annually due to the non-renewal of these agreements.
The group stated, “Exiting these high-cost minimum guarantees is one of the components for setting Catena on a path to improved margins and revenue growth in the second half of 2024.”
Pierre Cadena, Catena Media’s interim chief executive, explained, “Catena Media is embedding a new product-focused operating model as part of our efforts to reestablish the company as a healthy business. We believe that this is the right action in our strategy, and we still forecast a return to sustainable growth with high-margin operations from the second half of 2024.”
These strategic changes, along with proceeds from recent divestments, will significantly strengthen Catena’s balance sheet. Cadena elaborated, “This provides us with further financial flexibility and strengthens our ability to repay our senior bond next year and to confidently manage the business debt load.”
He added, “We continue to see media partnerships as an important source of added value in a fast-moving marketplace. We are ready to invest in partnerships that generate profit for both parties and will explore attractive collaborations in this space while redoubling our focus on our organic products.”
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