Catena Media : Interim Report – Q3 2020

INTERIM REP ORT THIRD QUARTER 2020

Interim Report January - September 2020

Updated financial targets and reviewed strategic direction

JULY - SEPTEMBER 2020

(COMPARED WITH JULY - SEPTEMBER 2019)

• Operating revenue amounted to EUR 24.9m (26.4), resulting in a decrease of 6 percent.
• Organic search revenue amounted to EUR 22.5m (23.1m) resulting in a decrease of 3 percent.
• New Depositing Customers (NDCs) totalled 94,710 (99,435), a decrease of 5 percent.
• Adjusted EBITDA increased by 4 percent and totalled EUR 12.0m (11.5), corresponding to an adjusted EBITDA margin of 48 percent (44).
• EBITDA, including a reversal of exceptional costs of EUR
  -0.2m (0.1m), increased by 7 percent and totalled EUR 12.2m (11.4), corresponding to an EBITDA margin of 49 percent (43).
• Net cash generated from operating activities decreased by 9 percent and amounted to EUR 8.5m (9.3).
• Earnings per share amounted to EUR 0.05 (0.20) before dilution and EUR 0.03 (0.19) after dilution.
• Cash and cash equivalents amounted to EUR 45.4m (11.7) on 30 September, following the EUR 49.5m partial prepay- ment in relation to the outstanding bonds during July.
• Net interest-bearing liabilities (NIBL) amounted to EUR 67.4m (150.8) on 30 September, resulting in a leverage ratio (NIBL/ Adjusted EBITDA) of 1.32 (3.42).

JANUARY - SEPTEMBER 2020

(COMPARED WITH JANUARY - SEPTEMBER 2019)

• Operating revenue amounted to EUR 79.4m (76.3) resulting in an increase of 4 percent.
• Organic search revenue amounted to EUR 72.3m (64.9m) resulting in an increase of 11 percent.
• New Depositing Customers (NDCs) totalled 318,565 (323,423), a decrease of 2 percent.
• Adjusted EBITDA increased by 23 percent and totalled EUR 39.7m (32.2), corresponding to an adjusted EBITDA margin of 50 percent (42).
• EBITDA, including exceptional costs of EUR 2.0m (0.2), increased by 18 percent and totalled EUR 37.7m (32.0), corresponding to an EBITDA margin of 47 percent (42).
• Net cash generated from operating activities increased by 28 percent and amounted to EUR 37.1m (29.0).
• Earnings per share amounted to EUR 0.08 (0.36) before dilution and EUR 0.05 (0.34) after dilution.
• Cash and cash equivalents amounted to EUR 45.4m (11.7) on 30 September, following the EUR 49.5m partial prepay- ment in relation to the outstanding bonds during July.
• Net interest-bearing liabilities (NIBL) amounted to EUR 67.4m (150.8) on 30 September, resulting in a leverage ratio (NIBL/ Adjusted EBITDA) of 1.32 (3.42).

FINANCIAL TARGETS AND REVIEWED STRATEGIC DIRECTION FOR THE PERIOD 2021-2025

Financial Targets:

• Profitable double-digit organic growth annually over the period, with the US being the core growth driver.
• Operate on a net interest-bearing debt/adjusted EBITDA interval of 0-1.75.

Strategic Direction:

• Net cash generated from operating activities estimates to be in the interval of EUR 300-370m during the period and will be used for divi- dends, and/or share buy-back pro- grammes, as well as strategic M&As.
• The Board's ambition is to propose a quarterly based dividend of SEK 0.65-0.75 per share and quarter starting during the second half of
  2021.

*Please find more information regarding reviewed strategic direction on page 8.

"Continued strong performance in the US and the recent strategic review reveal a bright future."

Per Hellberg / CEO

-6%		-3%		+4%
JULY - SEP 2020		JULY - SEP 2020		JULY - SEP 2020
REVENUE GROWTH YOY		ORGANIC SEARCH REVENUE		ADJUSTED EBITDA
EUR 24.9m		GROWTH YOY		GROWTH YOY
	EUR 22.5m		EUR 12.0m
JULY - SEP 2020		30 SEPTEMBER 2020		30 SEPTEMBER 2020
48%		67.4		1.32
		EURm
ADJUSTED EBITDA		NET INTEREST-BEARING		NIBL/ADJUSTED
MARGIN		LIABILITIES (NIBL)		EBITDA RATIO

Q3 KEY TAKEAWAYS

• Increased adjusted EBITDA by 4% to EUR 12.0m.
• Total revenues decreased by 6% with organic search revenues decreasing by 3% as reduced PPC spend only impacted paid revenues. New Depositing Customers (NDCs) decreased by 5%.
• The Sports segment has been impacted by Covid-19 and started to grow back during the quarter as sport events returned.
• The European legacy Casino segment has experienced negative impacts from the Google update in May, particularly in Germany.

• The Casino businesses in Japan and AskGamblers have both been showing strong growth.
• The US iGaming business has been developing well with double-digit growth and represented 30% of the Company's total revenues during the third quarter.
• Continued high investments into the US market to maintain our dominant No.1 position.
• The business and organisation successfully adapted to continuous challenges from Covid-19 impacts around the globe.

INTERIM REP ORT Q3, 2020 / CATENA MEDIA PLC

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Consolidated key data and ratios

In addition to financial measures defined by IFRS, Catena Media presents some alternative performance measures in this interim report that are not defined by IFRS. These alternative performance measures provide valuable additional information to investors and management for evaluating the financial performance and position of Catena Media. These non-IFRS measures, as defined on the last page of this report,

will not necessarily be comparable to similarly titled measures in other companies' reports. Neither should they be considered as substitutes to financial reporting measures prepared in accordance with IFRS. More information, as well as calculations of key ratios, are found at https://www.catenamedia.com/investors/key-performance-indicators-definitions/

	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jan-Dec
	2020	2019	2020	2019	2019
Financial measures defined by IFRS
Revenues (EUR '000)	24,877	26,421	79,356	76,262	102,817
Earnings per share before dilution (EUR)	0.05	0.20	0.08	0.36	(0.18)
Earnings per share after dilution (EUR)	0.03	0.19	0.05	0.34	(0.17)
Weighted average number of outstanding shares at period's	64,771	58,195	62,291	57,208	57,556
end before dilution (EUR '000)
Weighted average number of outstanding shares at period's	105,856	61,273	101,886	60,286	60,676
end after dilution (EUR '000)
Alternative Performance Measures
EBITDA (EUR '000)	12,154	11,398	37,655	31,983	40,506
EBITDA margin (%)	49	43	47	42	39
Adjusted EBITDA (EUR '000)	12,011	11,505	39,710	32,194	43,471
Adjusted EBITDA margin (%)*	48	44	50	42	42
Effective tax rate (%)	19	7	23	6	(2)
New depositing customers ('000)	95	99	319	323	437
Average shareholders' equity, last 12 months (EUR '000)	187,862	149,724	187,862	149,724	158,626
Return on equity, rolling 12 months (%)	(14)	22	(14)	22	(7)
Equity-to-assets ratio (%)	65	48	65	48	44
Quick ratio (%)	303	102	303	102	123
Net interest-bearing liabilities (NIBL) (EUR '000)	67,373	150,802	67,373	150,802	150,214
NIBL/EBITDA multiple	1.46	3.43	1.46	3.43	3.71
NIBL/adjusted EBITDA multiple	1.32	3.42	1.32	3.42	3.46
NIBL (including hybrid capital securities)(€'000)	128,235	150,802	128,235	150,802	150,214
NIBL (including hybrid capital securities)/EBITDA multiple	2.78	3.43	2.78	3.43	3.71
NIBL (including hybrid capital securities)/Adjusted EBITDA multiple	2.52	3.42	2.52	3.42	3.46
Debt/equity ratio multiple	0.53	1.08	0.53	1.08	1.26
Equity per share before dilution (EUR)	3.63	3.04	3.77	3.09	2.55
Equity per share after dilution (EUR)	2.22	2.89	2.31	2.93	2.42
Average number of employees	400	397	397	390	396
Employees at period-end/year end	404	402	404	402	404
Productivity ratio (EUR '000)	62	67	200	196	260
Adjusted EBITDA productivity ratio (EUR '000)	30	29	100	83	110

.*Adjusted for reorganisation costs of EUR 0.02m (0.1), credit facility and refinancing-related costs of EUR -0.2m (0.02) in Q3 2020. Adjustments for the period ended 30 September 2020 related to reorganisation costs of EUR 0.5m (0.1), credit facility and refinancing-related costs of EUR 1.6m (0.1) Adjustments for the year ended 31 December 2019 related to reorganisation costs of EUR 0.3m, credit facility costs of EUR 0.1m and loss allowances on trade receivables of EUR 2.7m.

INTERIM REP ORT Q3, 2020 / CATENA MEDIA PLC

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CEO COMMENTS FOR THE THIRD QUARTER 2020

Continued strong performance in the US and the recent strategic review reveal a bright future

STRATEGIC REVIEW

This autumn, the board and management of Catena Media reviewed and updated our strategic directions and financial targets for 2021- 2025. Before moving on to operational matters, let me briefly summarise some key points resulting from that strategic review:

First of all, we foresee a continued strong demand for iGaming affiliate services, with the US as our core revenue driver, supported by continued expansion into Latin America, Asia and certain central European markets. We will continue the restructuring of our European operations for increased market share and cost-efficiency. We see Sports increasing its share of our total business, which matches trends in the iGaming industry; we won't be making further investments into the Financial Services segment.

Regarding financial targets, our plans for double-digit growth and improved debt/equity ratios are unchanged. Additionally, and as part of our new strategy, we expect to use EUR 300-370m of net cash from operating activities for dividends, and/or share buy-backprogrammes, as well as strategic M&As.

A POSITIVE YEAR IN REVIEW

Our optimistic plans are reflected in our operational success stories.

Take the US, for example, where we are the No. 1 iGaming affiliate; we see a potential for our US business to generate the same amount of revenue as the entire Catena Media group does today. But it's up to state legislators to decide when such potential is unlocked for us, so the timing is unpredictable. We will, however, intensify our investments in the US in order to ensure a continued dominant position in any state going live at any time. And we will probably not have to wait long for additional states to go live, so we foresee significant action already in 2021.

Catena Media is in much better operational shape than it was 12 months ago. While we experienced some short-term revenue disruptions in Q3, they came with increased profits, so they haven't changed our long-term focus on growth. Restructuring is underway to return our European business to growth and a new, more cost-efficient operation has been established. Gone are the high debt levels after successfully refinancing the company earlier this year, we are entering a new phase, which will mean room for manoeuvre in line with the new strategy.

THIRD QUARTER INCREASING ADJ. EBITDA

DESPITE SHORT TERM REVENUE DECLINE

We managed to improve our adj. EBITDA by 4% compared to last year despite declining revenues and increased investments, as we are operating the company much more efficiently. Revenues began trending upward at the very end of the quarter, with the return of international sports and the NFL in particular.

Following the onset of the Covid-19 pandemic, several markets are still not showing the same levels of search volumes and traffic quality as last year. Improvements were however seen toward the end of the quarter. In our case, European Sports and Casino saw year-on-year declines, but these were compensated by positive results in the US and Japan. In Europe, while Germany had its challenges, Italy as well as AskGamblers performed strongly.

The Google update in May, followed by additional smaller updates, turned out to impact some sites more than initially predicted. This was especially the case in Germany, where both Sports and Casino traffic were negatively impacted. After vigorous interventions, including revisiting the content quality and structure with both internal and external expertise, we saw the traffic and performance from most of the impacted sites turning around from decline to growth by the end of the quarter, even though not yet back to previous levels.

SPORTS RECOVERING LATE IN THE QUARTER

Sports finally started to grow in Q3 but in a more complex manner, driven by the impacts of Covid-19 on event schedules. We experienced a healthy increase in NDCs, but revenue growth was slower, impacted in

part by lower margins and increased operator bonuses to both new and current customers when the leagues restarted in mid-September.

Germany turned out below our expectations, mainly because Bundesliga matches were not scheduled until the last ten days of the quarter. In the US, the most important league for us, the NFL, only started at the end of the quarter, with no pre-season games, pushing our revenue growth to quite late in the quarter.

As a part of restructuring and improving our European Sports business offering, we launched Squawka Bet, a new and improved addition to our popular Squawka football brand.

CASINO SENSITIVE TO USER BEHAVIOUR

While the US, Japan and AskGamblers all performed better than last year, our European Casino business experienced a decline, as some brands were still adapting to the Google update in the spring, but also because of short-term changes in traffic trends and user behaviour. We could, however, see things starting to normalise by the end of the quarter.

US - MAINTAINING OUR PREMIER POSITION

As the No. 1 iGaming affiliate in the US, we experienced continued strong performance, even though the NFL started very late in the quarter. Multiple new states showed good early results, while Pennsylvania experienced a bit of a performance dip, which is what we also encountered in New Jersey the second year after launch. Illinois opened up online registration under a temporary order in the third quarter, which was a welcome surprise even if only very few operators were ready to go live on such short notice. The US iGaming business has been developing well with double-digit growth and represented 30% of the Company's total revenues during the third quarter.

FINANCIAL SERVICES BENEFITTING FROM IMPROVED EFFICIENCY Financial Services showed stable performance with an improved margin YOY, due to several initiatives we took to improve efficiency.

REMOTE WORKING PROJECT FOR

IMPROVING OPERATIONAL EFFICIENCY

As a result of Covid-19, the world is experiencing less flexibility in travelling and expatriation, which has led to a large proportion of employees working remotely. We foresee that this trend will continue for quite some time, so we have initiated several remote working initiatives to cope with this new situation, allowing us to get the best people onboard, regardless of where they reside. We are already operating our US business using a remote working model, which has turned out very successfully, and we will further utilise this setup to support our geographical expansion. We expect to see both improved output and cost-efficiencies as a result.

Another significant project we are running is restructuring our data and business intelligence operations to improve funnel management efficiency, with the help of AI and Machine Learning in the future. This to ensure the highest possible lifetime values both for us and our operators. To make this happen, we have brought a new management team onboard in R&D, BI and Project Management over the past six months to ensure considerably better execution quality.

SUMMARY

Given the current Covid-19 situation, we foresee an unpredictable market unfolding for quite some time. The upcoming German legislations taking effect in July 2021 is another issue, and we have already taken actions to mitigate it. Our focus, however, remains unchanged: Short-term disruptions do not impact our long-term strategy and growth potential.

Through our strategic review, we foresee significant mid-term and long-term growth opportunities, but the journey is likely going to be challenging, as the past eight months have already demonstrated. But we have also learned to adapt and adjust very rapidly to new market circumstances, which is exactly why we see great potential ahead of us. Because when change has become the new normal, adaptability is the key.

Per Hellberg, CEO

INTERIM REP ORT Q3, 2020 / CATENA MEDIA PLC

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