Affiliate Marketers Catena Post Big Loss

Catena Media, the iGaming and Finance experts who work withing the betting affiliate sphere, have posted a full-year loss for 2019 of some €10.5million (£8.8million).

The huge deficit has been attributed to impairment charges accrued by the firm, something they’ve racked up due to the assets they acquired between 2016 and 2018 as all of their main business interests also struggled during the same period.

Revenue Down at Catena in 2019

While acquisitions have been blamed, it cannot take away the fact that revenue for the same twelve-month period from January 1st to December 31st 2019 were down by 2.1% versus 2018, from €105million to €102.8million.

The firm also acknowledged a 1.8% decline year-on-year in their search revenue to €88.3million from €89.9million, while Catena’s paid revenue also tumbled and this time significantly by 15% to €11.9million. Subscription revenue also went down hugely, regressing by 57.7% versus 2018 to just €2.6million.

The affiliate specialist has said that revenue share arrangements they had in place were responsible for 43% of their total full-year revenue, with another 40% attributed to cost per acquisition revenue.

As well as this, 15% came from fixed fees and another 2% from subscriptions with Catena pointing out that roughly 81% of their revenue overall was generated in either locally regulated or taxed markets.

Costs Increasing

While the firm hasn’t performed as well as it would like in terms of income, the big news as far as they’re concerned has been their spending as Catena moved to issue a warning that higher costs related to specific areas of their business would impact overall performance.

During the time accounted for, total operating expenses rose a huge 64.9% to €108.5million with Catena heavily feeling the effects of additional expenditures.

Direct costs were up 4.6% versus 2018 to €13.6million and personnel expenses jumped to €22.8million from around €19million with depreciation and amortisation climbing to €14.1million, a rise of 62.1%.

Despite the doom and gloom in the headlines of their financials, Catena have been at pains to remind us that impairment costs on their intangible assets totalled €32.1million, the write-down being entirely related to assets they acquired over the previous two years.

Impairment costs are something that need to be included in business expenses when the set value of an asset exceeds the recoverable amount, and Catena’s impairment costs have included a write-down of some €17.9million relating to assets primarily focused on the European Union.

As well as this, €13.2million relates to casino assets they acquired in 2016 and another €900,000 is in reference to assets within the sports market. Catena’s ‘exceptional costs’ also included a loss of €2.7million in allowances on trade receivables and another €2million for a refinanced bond as well as extra spending on reorganising costs and a new credit facility.

These significantly higher operating costs versus the previous year, along with the aforementioned decline in revenue for the period, means Catena has reported an operating loss of €5.7million. In 2018, this was a €39.1million profit.

Their loss before tax came to €10.3million, 2018 showed a profit of €33.1million, and after taxes of €178,000 were paid the total loss for 2019 stood at €10.5million, a heavy downfall from their €30.8million profit in 2018.

Chief Exec Speaks Out About Performance

Catena’s chief executive, Per Hellberg, has spoken since the release of the financial report and has said that as the efforts his company has dedicated to their products now show a more positive growth trend, they did also see challenges with acquired assets not performing as planned.

Hellberg says that, in the company’s strategic review including operational efficiency programmes and evaluations of previously acquired products, they are tracking the value of some assets attained in 2016-2018 which now cannot perform in today’s market conditions.

While the chief exec’s comments may offer comfort to some, a striking point is that most of the additional spending by Catena took place in the fourth quarter during a time when revenue was down. Year-on-year revenues were going backwards in search, paid revenue and subscription revenue alike.

Quarter four operating costs totalled €53.8million, a figure up a whopping 200.6% on 2018, which ended up contributing to an operating loss of €27.3million.

For his part, Hellberg says that Catena will continue to execute its strategy which is to focus on few brands, to invest in new markets and to continue their focus on controlling costs this year. The firm’s leader has said they are prepared for continued improvements throughout 2020 and beyond.

Certainly, it will be very interesting to see this time next year whether Catena has indeed managed to curb its spending.