Catena Media Expects Q2 Revenue Drop Because of Google Changes

At the start of May, affiliate business with a presence across multiple geographical markets, 

Catena Media, published its first quarter results for 2024, signaling suboptimal results. 

The serious drop across the board was tied to the poor execution of the business strategy, as well as Google’s recent changes.

In similar news, the company that operates in the online sports betting and casino gaming sector has issued a warning regarding its expected profit for the second quarter of the year. 

Catena Media’s projection in terms of Q2 revenue mentioned a 20.12% drop compared to the results recorded in Q2 2023.

According to the company’s leadership, Google’s latest changes to its organic search policies have lowered the effectiveness of a few of its strategic media partnerships. 

This, in turn, has impacted the company’s direct costs and revenue.

The company explained that it cannot yet quantify the financial impact that the changes in its media partnerships would bring to the table, adding it “could become material over future periods.”

Search Pattern Changes

Google’s new policy to redirect search patterns towards content that is highly relevant and qualitative went into effect in May. 

The changes negatively impacted the rankings of big news media platforms in terms of published casino and sports betting content. 

Despite the new requirements, Catena Media noticed an improvement when it comes to organic search rankings as well as higher traffic recorded by a few of the brands that it owns and operates. 

Nonetheless, the affiliate business expects the revenue for Q2 2024 to range between €12.5 million ($13.3 million) and €13.5 million ($14.4 million).

Even at the upper end, the figure is reflective of a major decrease of around 20% compared to the same quarter of last year. 

At the same time, the adjusted EBITDA is likely to range between €0.5 million ($534,000) and €1.5 million ($1.6 million), from €2.6 million ($2.7 million) in the second quarter of 2023.

Because of the continuous organizational changes and the company’s fresh operating model, the new team of executive managers and board of directors have announced they would not issue a new full-year adjusted EBITDA guidance for the time being. 

Strategy for H2 Growth 

Catena Media announced some of its media partnerships with lower margins that are scheduled to expire in the second and third quarters will not be renewed.

The partnerships involve more than €1.4 million ($1.49 million) in minimum guarantees per quarter. The guarantees are considered direct costs in the financial statements.

The company also expects its internal and outsourced content costs to go down by €0.7 million ($747,000) to €1 million ($1.06 million) annually as a result of the agreements not being renewed. 

Catena believes that by getting rid of the high-cost minimum guarantees, it will manage to improve its margins and grow its revenue during the second half of the year. 

Plus, according to interim chief executive officer, Pierre Cadena, the company is getting ready to embed “a new product-focused operating model” as a means of returning to the “healthy business” status.  

While Catena expects these changes mixed with proceeds from fresh divestments will trigger a healthier balance sheet, investors did not take the update very well, causing a 5% drop in shares.

A week ago, Catena Media appointed Jamie-Grace Farrugia vice-president of human resources while bidding farewell to Fiona Ewins Brown.