Catena Media Updates Q2 Earnings Amid Google Policy Changes

Catena Media plc has issued a Q2 earnings update following preliminary financial results for May and an evaluation of the recent industry-wide impact of changes in Google’s organic search policies. These changes have diminished the effectiveness of certain strategic media partnerships.

The updates stem from Google’s site reputation abuse policy, which took effect in May. This policy has negatively impacted the rankings of sports betting and casino content published by several major news media websites. Consequently, Catena Media anticipates reduced revenues and increased direct costs from some media partnerships. However, an offsetting effect has been observed, with higher traffic and improved organic search rankings for some of Catena’s owned and operated brands, as search patterns shift towards high-quality, relevant content.

Based on these developments, Catena Media has provided the following financial estimates:

  • Expected revenue for Q2 2024 is in the range of €12.5-13.5 million.
  • Adjusted EBITDA is projected to be between €0.5-1.5 million.
  • The company reiterates its forecast for a return to revenue growth in the second half of 2024.

The full financial impact related to media partnerships cannot be fully quantified at this time, but it could become significant in future periods, depending on the group’s organic traffic offset. Given the current organisational transformation and transition to a new operating model, the new board of directors and executive management team have concluded that the previous full-year adjusted EBITDA forecast is no longer applicable. They have decided not to issue new guidance at this time.

Furthermore, certain lower-margin media partnerships will not be renewed upon the expiration of their current terms in Q2 and Q3 2024. These partnerships currently entail more than EUR 1.4 million per quarter in minimum guarantees, which are treated as direct costs in the group’s financial statements. Additionally, internal and outsourced content costs are expected to decrease by EUR 0.7-1.0 million annually due to the non-renewal of these agreements. Exiting these high-cost minimum guarantees is a strategic move aimed at setting Catena on a path to improved margins and revenue growth in the second half of 2024.

Catena Media remains focused on leveraging its strengths and adapting to the evolving digital landscape to ensure sustained growth and profitability.

Pierre Cadena, Catena Media Interim CEO, commented: “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.

“As a result of these changes, combined with the proceeds from our recent divestments, our balance sheet will be much healthier. 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.

“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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