Catena Media Reports Losses of €10.5m

Malta-based Catena Media, one of the largest affiliate marketing companies has reported the loss of €10.5m (£8.8m/$11.3m) over the course of 2019. All of the core arms of the business struggled throughout the year and the company has stated the root of the issues stemmed from impairment charges leveled against it from 2016 to 2018.

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Catena Media has reported losses totaling €10.5m from January to December of 2019. The company has previously exhibited high growth, so these financial results were somewhat unexpected. ©geralt/Pixabay

The financial report for the period from January to December 2019 was released by Catena Media last week and has shed light on a loss of revenue for the company over this time. The total revenue for the year for Catena Media was €102.8m. This figure represents a 2.1% drop from the €105.0m that was taken over the same period of 2018.

Catena Media describes itself as a high-quality lead generation company that provides its services for businesses in the iGaming and Financial sectors. The company has seen high growth rates over recent years and claims its business model is scalable and that it plans to expand further. The recent losses have, therefore, come as a bit of a shock.

Search revenue was one type of income that took a hit during 2019 for Catena Media. This saw a decrease from €89.9m from January to December 2018 to €88.3m over the same period in 2019 (down 1.8%). In addition to this, paid revenue also declined to €11.9m (down 15.0%) and the income from subscription services also fell to €2.6m (down 57.7%).

Of the revenue that Catena Media did make, 43% was accounted for by revenue share arrangements.

The giant of affiliate marketing attempted to soften the blow of the financial report by releasing a statement prior to the release of the report warning of a less than impressive year. In the statement, the company claimed that an increase in costs in certain areas of the business would likely have an effect on the financial performance of the business for the year.

During 2019, the total operating costs of the business were €108.5m. This represents a 64.9% increase on the figure that was reported for 2018. The additional costs that were faced by Catena Media came from various sources. Direct costs increased to €13.6m (up 4.6%) and simultaneously the costs associated with staff and personnel jumped to €22.8m (up 18.8%). On top of this, depreciation and amortization spending increased to €14.1m (up 62.1%).

Catena Media also reported impairment costs on certain intangible assets that came to a total of €32.1m. These costs are related to assets that the company took control of from 2016 to 2018. Included in these costs was an amount of €17.9m for assets that are mainly focused within the European Union.

An additional €13.2m was lost from casino-related assets that the company gained control of in 2016 and a further €900,000 was lost from assets that Catena Media holds in the sports market. On top of these costs, €2.7m was set aside for loss allowances on trade receivables and €2.0m was paid for a refinanced bond.

Fourth Quarter Spending Increase

Most of the additional spending by the company was done during the fourth quarter of 2019. During this period, revenue had also dropped to €26.6m (down 2.6%). The main areas that led to the decrease in revenue were declines in search revenue, subscription revenue, and paid revenue.

The operating expenses during the fourth quarter were €53.8m, which represents an astronomical 200.6% increase on the fourth quarter of 2018. These expenses contributed heavily to the operating loss that was posted for the quarter.

The operating costs that Catena Media reported in its financial statement for 2019 were, on the whole, much higher than they were for 2018, which, alongside a drop in revenue resulted in an operating loss of €5.7m over the year. In 2018, the company posted an operating profit of €39.1m which puts the fall in prospects for Catena in a damning light.

Before taxes, the loss for the year was €10.3m, compared to the profit of €33.1m that was reported during the previous year. The tax bill for Catena Media for 2019 was €178,000, which the company duly paid to take its losses for the year to €10.5m after taxes, compared to a profit of €30.8m in 2018.

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