YEAR-END 2018 PRESENTATION 7 FEBRUARY 2019

Transcription

1 YEAR-END 2018 PRESENTATION 7 FEBRUARY 2019

2 Presenters PER HELLBERG CEO ERIK EDEEN INTERIM GROUP CFO 2

3 Q4 Highlights The process of transitioning from a distinct acquisition strategy to an increased focus on organic growth is progressing and the results have already been favourable, with clear indicators that we are on the right path. OCT-DEC 2018 OCT-DEC 2018 OCT-DEC % EUR 27.3m REVENUE GROWTH YOY 8% EUR 12.0m ADJUSTED EBITDA GROWTH YOY 83% EUR 0.22 EPS GROWTH YOY Per Hellberg / CEO 3

4 CATENA MEDIA IN BRIEF CATENA MEDIA PROVIDES COMPANIES WITH HIGH-QUALITY ONLINE LEAD GENERATION Through strong organic growth and strategic acquisitions, Catena Media has, since 2012, established a leading market position with approximately 360 employees in the US, Australia, Japan, Serbia, the UK, Sweden, Italy and Malta (HQ). Total sales in 2018 reached EUR 105m. The company is listed on Nasdaq Stockholm, Mid Cap. 4

5 Our Locations SWEDEN LONDON - UK SERBIA ANDOVER - UK USA ITALY MALTA JAPAN AUSTRALIA 5

6 Catena Media Business Model Potential Leads Leads Converted Leads SEO Marketing Tool Pay Per Click Marketing Tool Revenue Models: - Revenue share - Cost per acquisition - Hybrid - Fixed - Subscription Potential Users B2C Catena Media s Platform Catena Media s Customers B2B End Users B2C Catena Media promotes more than 1,200 brands Catena Media has currently about 1,000 online B2B Customers/Operators 6

7 Executive Management PER HELLBERG Chief Executive Officer ERIK EDEEN Interim Group CFO ANDREAS ERICSON ÅSA HILLSTEN Head of Investor Relations JOHANNES BERGH Chief Operating Officer LOUISE WENDEL Head of Legal Head of Mergers & Acquisitions 7

8 Financials Q

9 Revenue growth EURm 1.5 Search revenue Subscription Q EUR 27.3m YoY GROWTH +36 % JAN DEC EUR 105.0m YoY GROWTH +55 % Paid revenue Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 9

10 Revenue streams The US market continues to show performance according to plan. Subscription revenue increased to 2% of total revenue in the fourth quarter as a result of the investment in the Financial vertical. 100% 0% SUBSCRIPTION 2 % FLAT FEES 10 % COST PER ACQUISITION 39% REVENUE SHARE 49% REVENUE STREAMS Q4 EURm 14.9 CAGR 92 % REVENUES In the period from 2015 to 2018, Catena Media increased its revenue by EUR 90.1m, equalling a CAGR (compounded average growth rate) of 92 percent. 10

11 Growth in Search Revenue Q4 Organic Growth in Search Revenue Q4 EURm YOY (+41%) Organic growth including acquisitions Q4 14.8% Organic growth including acquisitions JAN DEC 23.4% 17.0 SEARCH REVENUE 11% Traditional organic growth Q4 Q GROWTH Q Traditional organic growth JAN DEC 15% 11

12 Regulated or taxed markets, Q4 76% of revenues come from locally regulated and/or taxed markets. Sweden is not yet included in regulated markets in Q REGULATED AND/OR TAXED 12

13 New Depositing Customers Q ,805 NDC +13 % YoY SUBSCRIPTIONS 9,165 JAN DEC ,475 NDC +40 % YoY Focus to increase revenue per NDC prioritised over volume Number of NDCs during Q2 was positiveley impacted by the FIFA World Cup Average NDC value in the US is higher than in Europe 133, , , , ,258 80,421 91, ,741 NDCs 47,530 56,352 67,023 32,634 Q Q Q Q Q Q Q Q Q Q Q Q

14 Adjusted EBITDA movement, Q compared with Q Catena Media s adjusted EBITDA margin decreased from 49% in Q to 44% in Q4. The margin in Q was impacted by a one-time payment of EUR 0.5m. Adjusted EBITDA margin excl. repayment amounts to 47.2%. By using less pay-per-click, direct costs decreased and improved the margin in the quarter. Personnel expenses gave a negative impact on the margin in the fourth quarter due to investments in the US market. Adjusted EBITDA% 49.1% 0.4% 47.2% 5.3% 3.4% -4.3% 43.8% -1.4% Slightly higher other operating expenses due to investments in the Financial Services vertical, primarily attributable to sales and marketing expenses. Increased provisions for bonuses and bad debt amounting to EUR 0.4m. Q DIRECT COSTS PERSONNEL EXPENSES OTHER OPERATING EXPENSES Q

15 Adjusted EBITDA movement, Jan-Dec 2017 compared with Jan-Dec 2018 Catena Media s adjusted EBITDA margin decreased from 53 percent in FY 2017 to 48 percent in FY Adjusted EBITDA% EURm 53.3% 0.7% 0.3% Direct costs decreased compared to revenue as a result of continued focus on maximising the positive margin. -6.6% 47.6% Personnel costs somewhat lower than last year. Higher operating expenses comprise professional fees, sales and other marketing costs, general expenses involved in strategic investment in US market and Financial services vertical. JAN DEC 2017 EBITDA MARGIN DIRECT COSTS PERSONNEL EXPENSES OTHER OPERATING EXPENSES JAN DEC 2018 EBITDA MARGIN 15

16 Statement of Financial Position Total assets amounted to EUR 378.9m. The Group s assets consist primarily of intangible assets relating to acquisitions. The Company s liabilities consist primarily of the EUR 144.0m bond, as well as EUR 81.9m in expected earn-out commitments. Option to settle approx. 50% of amounts committed on acquisition in shares which would result in increase in equity. EURm Other¹ Cash and equivalents BALANCE SHEET AS AT 31 DECEMBER Intangible assets⁴ Approx. 50% can be settled in shares Other² Borrowings Amounts committed to acquisitions³ 1) Other includes property, plant and equipment and trade and other receivables. 2) Other includes trade and other payables, deferred tax liabilities and current tax liabilities. 3) Includes both current (EUR 60.7m) and non-current (EUR 21.2m) commitments 4) Intangible assets primarily relate to goodwill, domains and websites, player databases and other intellectual property Equity ASSETS EQUITY AND LIABILITIES 16

17 Cash flow and funding Net Cash generated from operating activities FY 2018 EUR 40.7m EUR 30m Multicurrency revolving bank facility with Swedbank - of which EUR 0m is issued. Senior unsecured bond with total framework of EUR 250m of which EUR 150m is issued. 17

18 Vertical Performance, Q4 REVENUE igaming 93% REVENUE FINANCIAL SERVICES REVENUE 6% TOTAL 100% Q CASINO 57 % OF REVENUES Q FINANCIAL SERVICES 6 % OF REVENUES Q SPORTS BETTING 37 % OF REVENUES EBITDA (ADJ.) EBITDA MARGIN (ADJ.) % 18% 44% 18

19 Financial Costs October to December 2018 EUR 12m EBITDA (ADJ) -> EQUAL TO REPORTED EBITDA There were no non-recurring items incurred in Q EUR, MILLIONS OCT DEC 2018 EBITDA 12.0 Depreciation and amortisation -2.5 EBIT 9.4 Interest payable on borrowings -2.2 Interest payable on borrowings is related to the bond. Notional interest is on earn-out liability. Depreciation and amortisation, fair value movement of the bond and other finance costs have no cash flow effect. EPS growth of 83% mainly due to the fair value assement of the bond. Other gains losses on bond liability at fair value through profit or loss +5.3 Other finance costs (notional interest and foreign exchange) +0.6 EBT 13.1 Tax -0.7 Profit for the quarter 12.4 Earnings per share (before dilution) EUR % 19

20 Business Update 20

21 History of the quarter UK EXPERIENCE STATUS 1. REDUCED DEMAND IN OCTOBER 2018 Due to one large operator held back on lead-gen in October due to World Cup aftermath. RESTARTED Action: Ensure less dependency on single operators. Our view is that this will give no long-term impact 2. OPERATOR CHURN IN Q4 Two smaller operators excited the UKmarket due to the legislative landscape. PARTLY RECOVERED Action: Rerouting traffic to other operators. Our view is that this will give no long-term impact 3. PPC (PAY-PER-CLICK) MEDIA COST INCREASE IN Q4 Too high price = No Margin. REALLOCATION TO OTHER PRODUCTS Action: UK to Other Markets + Sports to Casino. Our view is that this will have a long-term impact on our UK business 21

22 Pay-Per-Click WHAT DRIVES HIGH PPC MEDIA COSTS? High demand for specific search words = Increased competition. IS HIGH PPC COST BAD? SHORT TERM: Yes If large part of a specific product s revenue shall come from PPC. EXAMPLE 1x PPC: EUR 2.0 Conversion rate (PPC to NDC): 1% Cost per NDC: EUR 200 CPA = EUR 250 Margin 25% NDC cost EUR 200 NDC cost EUR 250 LONG TERM: No Increased demand for search words increase the cost, thus improving lead-gen attractiveness and demand as well. Result: Action: Impact: Ideal case High PPC-cost No margin a) Hold back investments b) Reallocate to other products/verticals where appropriate margins can be achieved. a) 100% reduced Direct Cost b) 120% reduced Revenue 22

23 US Business update Q4 RESULT Revenue and Costs as planned. Fewer NDCs generated per month during Q4 vs. September. Q4 however larger in total than Q3 (3 months vs. 1). AFFILIATION WEIGHT OF TOTAL NDCS Currently approximately 5%* of all NDCs in New Jersey. Share of affiliation is likely to increase up to normal levels over time as additional operators join and DFS operators database conversion rate reduces. ORGANISATION PREPARED FOR GROW 24 FTEs in US. Core focus Optimising sites/products in states to be launched plus constant SEO and UX-improvements on sites already live. * Catena Media internal estimate 23

24 US New state roll-out West Virginia now live No affiliation yet due to technical issues on the operator side. Casino Forecasted*: Delaware: New Jersey: Pennsylvania: Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Comments Small revenue Pennsylvania next in line (expected in Q2). An increased number of states pushing to pass their legal bills. Sportsbetting Forecasted*: Delaware: New Jersey: West Virginia: Pennsylvania: Small revenue Small revenue projected Non-Forecasted: Rhode Island: Michigan: Mississippi: New York: New bill introduced in Likely to pass. Bill introduced not likely to pass 1st time. Maybe Out for online for a bit based on recent bills approved. In discussion (online unclear) Non-Forecasted: Indiana / Kansas: Louisiana / Massachusetts: + Colorado / Kentucky / Missouri / Ohio / Oklahoma / South Dakota Maybe Legislative actions, inclusion of online unclear until bill drafted. Maybe Legislative actions, inclusion of online unclear. *) Included in Catena Media's forecast. 24

25 US Legal update & summary WIRE ACT Our current view is that the Wire Act won t have an impact on our position nor on the long-term growth opportunities in the US market. SUMMARY We are proceeding according to plan but our future growth trend is dependent on the timing of new states to be rolled out. In the meantime, we are preparing to optimise our products for these new states accordingly. 25

26 Key focus/activities the past 6 months THEME: MOVE OPERATIONAL FOCUS FROM INTEGRATING ACQUISITIONS TO ORGANIC GROWTH VERTICALS/BRANDS A. Strengthen & further improve core brands. Examples: Ask Gamblers Almost doubled run-rate in 2018 Germany 3rd-largest traffic generator only 12 months after launch US now 2nd-largest traffic generator with majority of traffic from US states set to launch in the future John Slots Adjustments for improved SEO Traffic volume regained. Slotsia Launched in Japan with positive result TECH Catena Press = Multi-product management system. To ensure efficient geographical expansion. FUNNEL Improved NDC quality = Actively work to improved funnelling of high value leads while cut low value NDCs AQUISITIONS Focus to grow and integrate what we have aquired. GEOGRAPHIC US B. Reprogram the Finance Vertical (away from reduced Crypto Currency and terminated Binary Options) 26

27 Focus Q1 going forward THEME: INITIATE GEOGRAPHICAL EXPANSION PROJECT OPERATIONAL STRUCTURE: Streamlining towards vertical structure for improved ROI VERTICAL/BRANDS: Ask Gamblers, John Slots, Leaprate and more being reprogrammed to be fully scalable into new markets TECH A. Dynamic CMS (Content Management System) automatically adjusts offer based on consumer s digital footprint = Improved UX for the consumer B. Increased investments in Business Intelligence COST EFFICIENCY: Projects initiated in Q4 to benefit from 2019 onwards FUNNEL: Continued focus on high-value lead funnelling AQUISITIONS: Unchanged focus focus to grow what we have plus eventual strategic acqusitions GEOGRAPHIC: US + initiate expansion project into new markets with existing product 27

28 Regarding 2020 target EUR 100m EBITDA ORGANIC GROWTH We are confident we will deliver double-digit organic growth annually based on the visibility we have today: Approx. 15% of curent revenue: Expected to decline over time (old revenue share accounts from discontinued affiliation sites, etc.) Approx. 10% of current revenue: Expected to have flat growth over time (products not suitable to scale) Remaining revenues: Expected at market average growth rate or higher due to: - Product improvements - Improved funnel management - Landgrabbing in regulated markets - Geographical expansion of existing core products. COST-EFFICIENCY Our growth strategy will not require increased costs in relation to revenue growth, hence cost-efficiency improvements. US We will need incremental states to launch in order to achieve the target. Margin considerable higher in the US business larger weight of revenues, higher margin. ACQUISITIONS We are focusing on strategic acquisitions to support target achievement. The quarterly improvement of our cash position will allow us to do so during the period. 28

29 Key takeaways from Q UK Short-term decrease actions taken to mitigate long-term impact. US Developing as planned DOUBLE-DIGIT Organic Growth* 11% *Organic growth including acquisitions 23.8%. GEOGRAPHICAL EXPANSION PLAN INITIATED The process of transitioning from a distinct acquisition strategy to an increased focus on organic growth is progressing and the results have already been favourable, with clear indicators that we are on the right path. Per Hellberg / CEO 29

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