Catena Media Issues Q2 Earnings Update Amid Google Search Policy Changes

Financial Estimates

This site reputation abuse update by Google, effective from May, is expected to reduce revenues and increase direct costs from some of the group’s media partnerships.

Catena Media has provided the following financial estimates for Q2 2024:

Revenue: Expected to be in the range of EUR 12.5-13.5 million.

Adjusted EBITDA: Anticipated to be between EUR 0.5-1.5 million.

Despite the challenges, Catena Media has observed an offsetting effect with higher traffic and improved organic search rankings for some of its owned and operated brands, as search patterns return to favoring high-quality, relevant content.

The company maintains its forecast for a return to revenue growth in the second half of 2024.

Strategic Adjustments and Cost Management

The financial impact of the media partnerships cannot be fully quantified yet but could become significant in future periods. Consequently, Catena Media’s new board of directors and executive management team have deemed the previous full-year adjusted EBITDA forecast inapplicable and have decided not to issue new guidance at this time.

Key strategic adjustments include:

Non-Renewal of Lower-Margin Media Partnerships: These partnerships, set to expire in Q2 and Q3 2024, include over EUR 1.4 million per quarter in minimum guarantees, which are recorded as direct costs. The non-renewal will reduce internal and outsourced content costs by EUR 0.7-1.0 million annually.

Operational Transformation: Catena Media is embedding a new product-focused operating model aimed at reestablishing the company as a healthy business. This strategy is expected to set the company on a path to improved margins and revenue growth in the latter half of 2024.

Pierre Cadena, Catena Media Interim CEO, commented: “Catena Media is embedding a new product-focused operating model as part of our efforts to reestablish the company as a healthy business. We believe that this is the right action in our strategy and we still forecast a return to sustainable growth with high-margin operations from the second half of 2024.”

Cadena also emphasized the financial benefits of these changes: “As a result of these changes, combined with the proceeds from our recent divestments, our balance sheet will be much healthier. This provides us with further financial flexibility and strengthens our ability to repay our senior bond next year and to confidently manage the business debt load.”

While the company recognizes the value of media partnerships in a fast-moving marketplace, it plans to focus on collaborations that generate mutual profit. Catena Media will continue to explore attractive partnerships while strengthening its emphasis on organic products.