Sinking fast
Catena Media cuts headcount, suspends debt interest payments
The former gaming affiliate giant shrinks even further.
HG Vora sets out its final case against Penn Entertainment.
Earnings: Bally’s adds Queen, but pro forma revenue falls.
Betr bet: PointsBet changes preference in bidding battle.
Venture playground: In focus – Soccer Odds, plus First Pitch contenders.
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S(E)OS
In trouble deep: Catena Media said it is cutting a further 25% of its headcount, removing a management layer in its entirety and suspending interest payments on a hybrid capital security bond loan as it struggles with declining revenues and profits.
Titanic mistakes: One sector insider told E+M the current management was dealing with the fallout from a “fatal course” set by a previous team. “They are just rearranging deck chairs on a sinking ship.”
Another affiliate sector source was even more blunt. “It’s a dead horse.”
Clamped: On the decision to suspend interest payments on the hybrid capital debt, CFO Mike Gerrow said that after “another consecutive quarter” of minimal cash flows from operations, it meant “extra pressure” had been applied to Catena’s financial position.
He added that the decision was made in order to secure a future financially and give the company a “chance to get back on our feet.”
He noted the company had redeemed its €10m revolving credit facility last year and plans to redeem €12.5m of outstanding bonds next month.
The hybrid capital securities date back to 2020 when the company issued warrants as part of a rights issue. The value of the hybrid capital securities as of the end of 2024 was €47.7m with annual interest set at a rate of STIBOR plus 8%.
According to the 2024 annual report, under the terms of the original agreement, Catena Media had the right to defer any interest payments.
However, that interest rate is set to rise to STIBOR plus 11% in July on the five-year anniversary, if Catena Media does not redeem the warrants.
By suspending interest payments, Catena will forego the distribution of dividends and share repurchases.
Hunger games: Catena said 50 roles were to be eliminated, affecting a mix of full-time employees and contractors. The company said the staffing cuts would deliver annualized cost reduction of €4.5m-€5m.
It added that, in parallel, it would generate a further €0.5m from tech consolidation.
For more, see yesterday’s Earnings Extra (PRO subscribers only).
Catch a falling knife: The news of the job cuts and interest payments deferment came with a preliminary announcement before the markets opened that Q1 revenues had tumbled by 39% to €9.8m, while adj. EBITDA collapsed 53% to €0.9m.
The shares fell nearly 10% in early trading before recovering slightly to end the day down 8%. YTD they are down over 56% and are currently valued at just SEK1.75, leaving the company worth SEK150m or just $15.4m.
The road to nowhere: One-time gaming affiliate market leader Catena Media achieved its status via a roll-up M&A strategy that saw it acquire dozens of long-tail affiliates along with some bigger fish, such as the PlayNJ assets and AskGamblers.
In the case of PlayNJ, Catena still owns the leading site LegalSportsReport, which forms one part of its still declining North American-facing operations.
However, AskGamblers and the rest of its European- and global-facing sites have been disposed of, the former going to Gentoo Media in a €45m sale in December 2022.
Earnings in brief
Gentoo Media: More woe for the affiliate sector came from Gentoo, which reported revenues declining 11% to €24.8m while EBITDA tumbled 39% to €8.2m. The company blamed the impact of market regulation in Brazil.
See E+M PRO’s Earnings Extra edition later today.
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HG Vora sets out its case
Express yourself: Activist investor HG Vora has filed its definitive proxy statement with the SEC, pressing Penn Entertainment shareholders to vote for all three of its board candidates and to “express their disapproval” of the incumbent board.
In the accompanying letter, the eponymous founder of HG Vora, Parag Vora, said the share price has been “plagued by value-destructive deal-making, reckless capital allocation and poor execution.”
Vora accused the board of being “unwilling to accept responsibility for its failures,” and instead has resorted to “extraordinary measures” to avoid accountability.
After attempting to co-opt a state regulator to defend its unwillingness to accept new board nominations, Vora said Penn’s actions to reduce the number of board positions up for election was a “most brazen act of entrenchment.”
Shareholders “should not tolerate such a manipulation of the electoral process, nor should they continue to accept Penn’s dismal performance,” Vora said.
Jam tomorrow: Vora continued with his attack, suggesting Penn’s “value-destructive” online strategy has been a disaster.
Despite the company being less valuable “by nearly all relevant measures,” the management team led by CEO Jay Snowden continues to insist the digital business is nearing an inflection point.
Even amid the failures, Vora said, Snowden himself has been “lavishly rewarded” and is now the second highest-paid CEO among his peers having received a “tone-deaf” 70% increase in compensation in 2024.
State of play: Recall, Penn has already accepted two of HG Vora’s board nominations – Johnny Hartnett and Carlos Ruisanchez – but the activist investor is pressing for the election of a third, former Penn CFO William Clifford.
+More
The Austrians schooled: Novomatic’s bid to buy the shares in Ainsworth Game Technology it does not own may be torpedoed by one of founder Len Ainsworth’s children, who is working with other investors to challenge the slot maker’s bid on grounds it is too cheap.
Bally’s earnings
Sum of the parts: Now augmented by its merger with Queen Casino & Entertainment and largely swallowed by majority shareholder Standard General, Bally’s said revenues fell 5% YoY to $589m.
Growth in regional casinos, up 3% to $351m, and UK online (up 4%) failed to counterbalance the decline in international online revenues caused by the exiting of the Asia-Pacific-facing operations. The segment saw revenue fall 18% to $192m. North American interactive was up 12.5% to $44.5m.
Under the weather: Robeson Reeves said the regional gaming business suffered from weather-related issues early in the quarter as well as from competitive pressures in key markets.
He noted the Chicago temporary casino continued to “fine tune” its operations.
The B&M gaming business saw adj. EBITDA rise 6% to $95.1m following the augmenting of the Queen Casino assets.
Refocus: Profitability in the international interactive segment fell 8% YoY to $77.1m, which the company ascribed to the divestiture of the Asia-Pac business. The company said this business was now “primarily” focused on the regulated European space.
North America online was also augmented by Queen Casino revenues as well as a ramp with its Rhode Island offering.
Star trekking: Reeves said the recent A$300m ($194m) investment in Australia’s Star Entertainment was “consistent” with the company’s historical operating strategy.
Head ’em off at the parse: CBRE said the Q1 earnings included “several moving parts,” which made its same-store analysis “challenging to parse through.” That said, the team added the performance “appears OK” despite the noise.
A betr offer
Reserve the right to a change of mind: After a conflab with its advisors, the board at PointsBet have had a rethink over the revised A$360m cash and shares offer from betr and now thinks it “could reasonably be expected” to best the A$353m offer from Japanese media conglomerate Mixi.
As a result, PointsBet said it “therefore proposes a form of mutual due diligence” be undertaken by both companies.
It added that this due diligence would be phased, with the initial focus on the “value of the synergies and the betr scrip.”
Paying for it: In order to fund the deal, betr has said it will be part-funded by a A$130m capital raise. A presentation accompanying the renewed offer also suggested betr would seek a sale of the Canadian arm of PointsBet for US$29.6m.
Getting out: Separately, Penn Interactive Ventures has announced that it has sold its entire 17m+ shareholding in PointsBet. The company was granted the shares as part of its market access agreement dating from 2019.
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The earnings edit
Aristocrat
The rules of the game: CEO Trevor Croker made a stinging attack on rival Light & Wonder with regard to the ongoing Dragon Train litigation, saying it was “clear to us” that L&W has “not played by the rules.”
See this morning’s Earnings Extra (PRO subscribers only)
IGT
Opening the envelope: Much as with any awards season, IGT has metaphorically had its tux dry-cleaned and has its speech prepared for Monday when the technical scoring aspects of the current lottery tender process in Italy are revealed.
See yesterday’s Earnings Extra (PRO subscribers only).
Sportradar
It’s in the game: Sportradar CEO Carsten Koerl said he sees the further growth of in-play betting globally all but inevitable, as the trends point to increasing take up of the format, which in more mature markets has reached 70% of GGR.
See yesterday’s Earnings Extra (PRO subscribers only).
Earning in brief
DoubleDown Interactive: Social casino and free-play revenue fell 12% YoY to $70.3m but the SuprNation iCasino segment was up 59% to $13.2m, leaving total revenues down 5% at $83.5m. EBITDA was down slightly at $30.8m.
Venture playground
In focus – Soccer Odds
Who are you? Led by founder and CEO Geoff Murray, Soccer Odds is an odds-notification product that claims to save a user time and effort in getting the best odds available and helps maximize their winnings.
“Soccer Odds is being built to solve problems that I’ve experienced betting on soccer for 20+ years,” Murray says.
“I’ve seen first-hand how often the odds fluctuate on upcoming games, how bettors often miss the best odds, and how much time is wasted repeatedly checking the latest odds and looking for up-to-date, relevant, picks and predictions”.
What’s the big idea? Murray claims that traditional odds-comparison products “put the strain on their users to repeatedly check on the current odds as they change.” But Soccer Odds is built with features like those found in a stock trading app.
“We notify our users directly when the odds improve on games they’re interested in betting on, enabling them to be more efficient in getting the best odds, and helping them maximize their value on winning bets,” he says.
“We’re building features and functionality to bring odds comparison into the modern era.”
KPIs: The company currently has a clickable product prototype demonstrating core functionality, and a customer pipeline of 500+ soccer bettors eager to use our product upon launch.
Funding background: Murray says Soccer Odds is currently raising its pre-seed round to build and launch its MVP and begin onboarding our first paying users.
Growth company news
Pitch perfect: The contenders for the First Pitch competition at this week’s SBC Americas event have been named. Up for the gong are live poker odds engine Sidebetz, smart search betting odds provider PromptBet.ai, B2B audio platform provider Staked AI and, not to be confusing, a short-form video content provider called Wager Games and video game platform provider Gamewagrs.
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Upcoming earnings
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