Part 2: The changing affiliate landscape
Catena Media sets its sights on the future
Rather disarmingly, Catena Media’s chief executive
Per Hellberg opened the company’s Capital Markets
Day presentation in London in November 2018 by
saying that the question he got asked “a lot” was,
“What happens if you stop acquiring businesses?”
It is a fair question for a company best known
for its willingness to get involved in M&A within the
affiliate space. By the its own count, Catena has
racked up 34 deals since it was formed in 2014,
making it by far the largest and most public of the
so-called super-affiliates.
Such is the company’s success in achieving scale
in the online gambling sphere that it made clear
its desire in the presentation that it be classed as a
lead-generation company alongside such familiar
names from the travel sector as Expedia and
Booking.com.
The long-term aim is to move into other verticals
and, indeed, as of now the company has a foothold
in the financials space via sites such as LeapRate.
com and ForexTraders.com. Yet, for the moment
it remains almost wholly online gambling focused.
In the third quarter 2018, it said that revenues
derived from online casino constituted 57% of total
revenues for the quarter, while 37% was derived
from sports-betting affiliates services and only 6%
came from the financials business.
Building scale through M&A
The benefits of those 34 acquisitions within
the past three or more years can be seen in the
quarter-on-quarter revenue progression for the
Chart 1: Catena Media quarterly revenues
Q115-Q318 (€m)
company since the fourth quarter 2015 (Chart 1).
In that period, revenues have risen nearly 370% to
€27.7m and, year on year, the third quarter of 2018
represented a 60% rise. On average, the company
has enjoyed quarter-on-quarter growth of 19%.
In yearly revenues, the company has achieved a
compound annual growth rate of 113%; the current
run rate for the year to the end of the third quarter
points annual revenues at €110.8m (Chart 2).
Going back to Hellberg’s question about what
happens if the rate of acquisitions slows, it can be seen
that the company’s evident success brings its own
challenges. The trendline on revenue growth is heading
south, down to around 10% as of the third quarter.
This is to be expected given the company’s scale.
Yet when it comes to the new depositing customers
number – the basic lifeblood of the business – we
can see that, in the third quarter of 2018, the total
number fell backwards for the first time (Chart 3).
The year-on-year growth rate also tells a story,
with the rate of growth moderating from around
the 80% level in the third quarter of 2017 to below
40% in 2018 (Chart 4).
Notably, perhaps, the company said the quarter-
on-quarter fall in NDCs occurred due to a World
Cup-related fall off in the late summer. Yet it is
perhaps not coincidental that since then Catena
Media has gone quiet on the M&A front, with the
last deal being the (now problematic) acquisition of
ASAP Italia in July.
Hellberg spoke during the presentation about the
NDCs number “not being spoken about internally”
Chart 2: Catena Media quarterly growth rate
Q415-Q318 (%)
30
50
27.7
45
26.1
25
40
23.9
35
20.1
20
30
15.2
15
15.1
17.3
12.3
10
9.6
25
20
10.7
15
7.5
5
10
5.9
5
0
0
Q415
Q116
Q216
Source: Company
14
Q316
Q416
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q415
Q116
Q216
Source: Company
Under pressure: Regulation and the evolution of affiliate marketing
Q316
Q416
Q117
Q217
Q317
Q417
Q118
Q218
Q318