In its preliminary financial report, Catena Media indicated that its revenue will be lower than expected as it also aims to reduce costs through streamlining content and staff layoffs.
The affiliate company now expects its Q3 revenue to fall between €10.5m (£8.73m/$11.3m) to €11m, down from the forecasted €15.9m target. While total adjusted EBITDA is now expected to be in the range of €1m to €1.5m, reduced from a €3.2m aim, with a corresponding margin of 10 to 14%.
Catena will also streamline its content production and content marketing teams as part of a transition to a “leaner, product-led organisation”. The affiliate aims to also help move finances to a smaller core of flagship products and diversify revenue streams.
Staff cuts
This will result in resizing the content marketing teams and the termination of 29 positions that are currently held in the business. These changes will help save around €400,000.
The cost-saving programme will generate a net annual saving of approximately €2.2m and will be in effect from 1 November.
On the new strategy that involves staff reductions, Catena Media CEO Michael Stan said as part of its drive to embed our new product-led organisation, Catena is “optimising the operational teams to achieve a flatter structure that is more closely aligned with our product goals.
“Today, our priority is to support all the individuals who are affected by the changes.”
€40m adds to the bill
The affiliate also revealed it has a non-cash impairment charge of €40m, which is related to the book value of specific sports betting assets following the launch of a new product operating models in recent months.
Catena’s transition to this new model involves its shift to focus product development on a cluster of core brands and as a result, the book value of certain non-crore products has reduced following the group’s underperformance in sports betting in recent quarters.
On the lower Q3 estimates and the impairment charge, Stan acknowledged that the company’s balance sheet reflects its current reality.
“In sports betting, we have been operating at a loss for an extended period,” he said. “We have responded to market challenges by shifting resources away from loss-making products and into those that we believe have the best potential to generate long-term value.
“I believe that this strategy will position us for success in the coming quarters.”
Cost base positives
The Catena CEO also said that he was pleased to see in Q3 an improvement in the cost base following the non-renewal of media partnerships and optimisation of other agreements, which reduced the top-line revenue but positively impacted adjusted EBITDA.
“We are keenly aware that the market is looking for signs of a return to revenue growth,” Stan added. “Although the figures reported today do not yet show that improvement, we see positive signals from the changes we have made in recent months such as a leaner cost base and improved search rankings, and we remain on course to achieve our objective.”
You can read a detailed analysis of Catena’s recent financials in the latest Affiliate Monitor.