Earnings+More - May 23: Catena considers breakup
May 23: Catena considers breakupCatena Media strategic review, Sportradar analyst reaction, Startup Focus - Fliff, the shares week +MoreGood morning. On today’s agenda:
Breaking up. Click here. Catena Media strategic reviewIf you don’t ask: Two days after revealing Q1 earnings, Catena Media said it is undergoing a “strategic review” of the business after “noticing” interest from third parties with regard to acquiring various assets including its flagship AskGamblers brand, its AskTraders financial assets and “certain other” of its global brands.
Too much to ask: In its Q1 statement last week Catena said AskGamblers had set a monthly revenue record in March but saw a “moderate decline in revenue for the period”.
Asking for a friend: On the financial assets, Catena’s statement added: “While the hesitation among first-time investors in the prevailing climate hit AskTraders, the German market – which accounts for about half of the segment’s revenue – held relatively firm.
AskGamblers no-background: Catena bought the Serbia-based European-focused AskGamblers in Apr16 for €15m. It said at the time the UK was its biggest market, though subsequent commentary (Q121) suggests it has also moved into the Japanese market.
** Sponsor’s message: Venture capital firm Yolo Investments is home to €551m of equity in more than 70 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 29-company, €183m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high roller live casino brand, Bombay Club. Playmaker buys Props NetworkMaking a play: Sticking with gaming affiliates, Toronto-listed Playmaker has bought TPN Media, owner of the Props Network, for an undisclosed sum. Co-founded by Kyle Piasecki, the Props Network was only formed at the start of 2020.
Wells Fargo recession estimatesEstimating the downturn: The team at Wells Fargo suggest investors in US gaming stocks are pricing in a 5%-10% revenue decline in 2023 and the same percentage fall in EBITDA.
Not buoyed: Boyd Gaming is the target for most pessimism, with the current valuation implying 12$ YoY declines in 2023. Net up is Red Rock Resorts where the implication is a 9% decline followed by Caesars with an implied 5% decline. The shares weekIn the wake of the news on the strategic rethink, gaming affiliate giant Catena Media enjoyed a good end to the week, soaring 13.5% on Friday. However, this only made up some of the ground lost over the week. Its five-day performance was down 8.7%. Playtech was also up over 6% on Friday helped by the news that the board’s independent committee has set a deadline for the TTB bid. However, it remains down 26% in the YTD. Sportradar analyst updateDiscount rate: Jefferies were positive on Sportradar shares but dropped its price target from $23 to $18, to reflect the rising rate environment and “sentiment on digital wagering prospects”, which they believe will take a couple more years to reach profitability.
Earnings in brief
Startup focus - FliffWho, what, where and when: Fliff is a free-to-play and low-staking real-money betting operator founded in 2019 by Matt Ricci, Mario Dodev and Ivan Velev. Initial product launch was in 2020. Operations are based in Philadelphia, with development in Sofia, Bulgaria. The social sportsbook gamifies the sports-betting experience with leaderboards, badges, and challenges while the sweepstakes provide a free-to-play opportunity to accumulate virtual currency that can be redeemed for gift cards and cash prizes. Funding backgrounder: Fliff has raised a seed round, but the amount and investors are undisclosed. So what's new? Ricci says Fliff has seen consistent month-over-month growth, especially in recent months. “We are soon launching a desktop and mobile web-app, and expanding our social features ahead of next football season to increase gamification, social rewards, and competition among users.” The longer pitch: Ricci says the company sees its opportunity in introducing sports fans to betting with a free-to-play and gamified user experience. “We are drawing on some of the mechanics and metagame elements of other successful mobile games, and applying them in a sports-betting context,” he adds.
The week aheadBringing up the rear: The Q1 earnings season is coming close with just a few stragglers left to fill out this week. First up on Wednesday is Super Group, the company behind the Betway and Spin online brands.
Team of rivals: Also reporting this week is esports and traditional sports-betting operator Rivalry. At the time of its Q4 earnings in late April, it said Q1 handle had reached a new record $40.2m, up 273% YoY and up 62% sequentially. DraftKings investor meeting: Jefferies says it will be meeting with DraftKings management this week. “Most important, in our view, will be discussion around the capital set-up and the balance of capturing market share, entering new markets and progressing toward profitability.” Newsletter schedule: Wednesday earnings extra, Thursday morning pod, Friday Weekend Edition.
Chart of the week: Bitcoin’s crypto-dominance. DatalinesNew York - week ending May 15: Betting handle dropped 13.7% to $286.2m, the state’s lowest total since launching on Jan8.
Leaders: FanDuel continued to lead with $120.1m in handle and $17.6m in revenue, DraftKings is second with $71.6m in handle and $6.3m in GGR, Caesars Sportsbook is third with $45.3m in handle and $3m in revenue, BetMGM is fourth with $30m and $2.2m in GGR. NewslinesCrown Resorts shareholders approved Blackstone’s $8.87bn acquisition and it now goes for regulatory approval on Tuesday. After the fall: Mohegan Gaming’s PlayFallsview mobile sports-betting and casino brand received regulatory approval in Ontario. PlayFallsview operates on Kambi’s sportsbook platform and will launch after it agrees to an operating contract with iGaming Ontario. What we’re readingFreeze frame: A Singapore court rules on a Bored Ape ownership dispute. Tracking problem gambling: The Times goes inside Flutter’s PG call center. On social“Ministers might not like a bet themselves. But millions of people do. People think politicians live on a different planet as it is. Telling voters what they can and cannot do with their own money won’t help”.
My piece today for @TheHouseMag Calendar
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May 20: Weekend Edition #47
Friday, May 20, 2022
Playtech TTB deadline, Aristocrat H122, MGM analyst update, Sportradar analyst reaction, sector watch - payments +More
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