Catena still keen on M&A opportunities

Catena still keen on M&A opportunities

Catena Media is set to continue expanding through “fewer but larger acquisitions” despite insisting that it has sharpened its focus on organic growth, according to CEO Per Hellberg.

Published 7th February 2019

In the company’s newly-published annual report, Catena revealed that turnover had rocketed by 55% year-on-year to €105m (£92/$119m) in 2018, helped by a 36% increase in sales to €27.3m in the final quarter. Earnings before tax and deductions increased by 47% to €47.8m in 2018.

However, organic growth, including acquisitions but excluding paid revenue, fell from 27% in the third quarter to 15% in the final three months of the year, bringing the average for the year down to 23%.

“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,” Hellberg (pictured) said.

However, later in the report, under a sub-heading entitled ‘fewer but larger acquisitions’, Hellberg added: “Focusing on organic growth does not mean that Catena Media will not make any acquisitions. We will make acquisitions in 2019.

“They will, however, be fewer and more strategically critical to the company’s future growth. We will focus on those bringing growth with clear synergies or adding something new to the organisation, like new technologies or skills.”

Catena added that search revenue had accounted for €89.9m of turnover in 2018, with paid revenue contributing €14m and subscription revenue providing €1.1m.

Sales derived through revenue-share arrangements comprised 49% of total turnover for the year, whilst revenues from cost-per-acquisition agreements contributed 39%. Fixed fees and subscription revenue generated 11% and 1% respectively.

Hellberg added: “You could say we want to achieve more with existing products. The acquisitions we have made needed to be better integrated into our business model and we needed to reorganise and prepare for the next growth phase. That process is now in full swing.

“The organic growth strategy has three main components: Streamlining proprietary, established brands, growing geographically and adjusting the company’s cost structure. We are already seeing positive effects from having fewer, better and larger brands rather than several smaller ones.”

Hellberg also underlined some key highlights, including Ask Gamblers having almost doubled sales in 2018, better cost management and encouraging expansion in markets such as Japan and the US.

“The number of (US) states seeking to regulate online gambling is increasing faster than anticipated,” he said.