Welcome to the Catena Media Q2 2023 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Michael Daly and Interim CFO, Erik Edeen. Please go ahead. Welcome. I'm Michael Daly, CEO, and I'm joined by our Interim Chief Financial Officer, Erik Edeen. Today, we'll speak to our Q2 interim report, related financials, and market updates. North American and group revenues were down 16% in the quarter, in what is historically our weakest quarter, as we saw an impact of stronger competition, particularly from competitors in media partnerships, whereby they have more domain strength to challenge our top keyword positions. Added to this was an impact in changes to operator spend for marketing, relating to some reduced sports rates and overall search volumes. With additional investment for the future to strengthen our position, such as our own growing number of media partnerships, new influencers, and paid search initiatives, our Adjusted EBITDA for continuing operations was down to EUR 2.6 million. It is worth noting that while group Adjusted EBITDA was lower, North American Adjusted EBITDA margin was still a strong 41%. Operating highlights during Q2. We continued driving the company to a net cash positive position, taking actions to focus on the regulated markets in the Americas, streamlining elsewhere for a solid and sustainable financial position. In the last five years, we reduced debt from in the range of EUR 150+ million to now being near net cash positive. We've adapted our operation model beyond organic search dominance, with heavier investment in strategic partnerships like Lee and Advance Local, and amplifying our paid search competencies. During Q2, and now at the start of Q3, we are focusing on preparing for a more competitive sports season in North America, with new entrants in operators like Fanatics and ESPN added into the mix, improving the affiliate environment. Events after the quarter. Catena Media has been purchasing shares since the quarter ended and will continue in the coming months. In line with our strategic review, the UK and Australia businesses were sold. We will use this contribution to further our position in the Americas while continuing to reduce our debt. On August eighth, we announced a cost reduction program targeting additional savings above those realized from the aforementioned divestments. This is a streamlining of primarily our EMEA operational support, does involve cost reduction across the entire portfolio. We expect most of these savings to be realized by year's end. On the growth front, post-quarter, we signed an additional media partnership with The Sporting News. This furthers our North American market penetration as we head into the NFL season, as well as gives us the ability to target much larger regions of Latin America in coming quarters. It's a very exciting partnership for us to add to our portfolio. July's continued operation revenues were down 3% year-on-year, versus 16% in Q2, as we are adjusting to new market dynamics and improving performance. I'll now turn it over to Erik to talk through the financials. Thank you, Michael. Looking into the financials for the second quarter, let's kick off with North America, where we concluded with a revenue of EUR 12.5 million, versus last year of EUR 14.9 million. We came out at an Adjusted EBITDA at EUR 5.1 million versus EUR 8.1 million, with a margin of 41% in the second quarter. Media partnerships expanded with an agreement with Lee Enterprises, one of the strongest U.S. newspaper publishers. We saw a seasonal effect in sports, where we noted a slowdown in marketing spend from betting operators, as well as the absence of state launches in the quarter. Moving forward to the rest of the world, revenue came in at EUR 4.3 million, and an Adjusted EBITDA at EUR 2 million in the quarter. The Adjusted EBITDA margin rose from 33% up to 46%, with an increase of 13% in the quarter, and that is primarily thanks to the cost optimization efforts in previous quarters. Further progress in developing sports and Latin American audiences to ensure high-quality revenues in the coming quarters. If we go down to the segments, we had a sports revenue of EUR 6.4 million in the quarter, and casino rose to EUR 10.5 million in the quarter. And that is a decrease in sports by 9%, and sports accounted for 38% of the group revenue in the quarter. We saw a strong performance in Italy, driving sports revenue increase of 4% in the rest of the world. Increased competition in North American casino affected the casino revenues negatively in the quarter. We continue with a high share of CPA deals on the North American market. Going down a bit into our cost structure in the quarter, we maintained our investments into content optimization and technological development. The costs in North America increased by 9% and accounted for 52% of the total group cost base from continuing operations. Direct costs increased versus the same quarter last year, primarily due to media and influencer partnerships in North America. The divestment of the UK and Australia and the launch of the cost reduction program is expected to see further optimization of the group cost structure here in the coming periods. If we look a little bit further into our cash position and our debt situation, we concluded the quarter with a net debt of EUR 23.1 million. The net cash position is expected to be achieved during the second half of this year, and we expect that to create further room for investments, share buybacks, as well as bond repurchases and possible acquisitions. Looking into the graph on the right side here, there's been quite a steep dive in terms of the debt situation in the company over the past years, where a large part of the cash flow has been used to reduce the debt, net debt situation. Leverage ended here in the quarter at 0.5. If we look a little bit further and, and also add, some light to the outlook and the future in terms of, of proceeds from the divestments we have conducted, starting off here with the debt situation. We currently have no amounts committed to in earlier acquisitions. Proceeds from previous divestments received during the quarter total to EUR 1.3 million. We have conducted bond buybacks here in the quarter of EUR 12.3 million up until the end of June. The cash position total to EUR 38 million, end of June. Looking into expected proceeds from divestments going forward, that you can see in the right box here on this slide, we have expected proceeds from divestments of EUR 33.6 million. Taking that into consideration, using the end of June net debt, we see a notional net cash position of EUR 10.6 million, including those expected proceeds from divested assets. Quite a significant reduction in the debt situation over time and looking forward, including the divestments that has been accomplished and the proceeds coming in from those, we see a net cash position. With that over and back to you, Michael. Thank you, Erik. I'll now talk about our strategy and outlook, which I'm going to take a moment to talk about the business cycles Catena Media works within, and what this means for future growth and opportunities. First is the launch cycle for new states and provinces in North America. This is something Catena Media's North American teams have been optimizing these last few years. 2021 saw five new sports states and two for casino, over 34 million in addressable adult populations, and we had a very strong year doubling revenues from North America. 2022 saw very healthy new state revenue growth, with four states adding sports and one casino, almost 55 million to the total addressable market. 2023 has been slower, with two markets thus far for sports and none for casino, adding only about 15 million adult population. Over the last few years, we've grown North America from about $18 million to over $80 million in revenues at an exceptional margin. This does not mean this cycle is ending. Rather, it is at a low point of the continuing launch cycle with a greater series of waves ahead. We have two more upcoming launches in 2023, Kentucky and Maine, albeit both are smaller, adding only another $4.5 million or so in adult population. Next year, the list has the significant state of North Carolina and Vermont for an additional $9 million adult population anticipated in Q1, or about 2x what we see being added in Q3, Q4 this year. After this, the launch cycle is going to ramp back out probably in the 2025 timeframe, as the US moves beyond election chaos and focuses on state budgets. More states than ever are talking about sports and casino bills. Sports betting remains a very viable growth area for over half the United States, which sits at 52% of states yet to regulate online sportsbook, and will likely get as high as at least 80%. Casino, which is a larger value for both state coffers as well as Catena Media, has 84% of states yet to regulate. We anticipate and are preparing for the mid to long game for many states to come. That's one cycle where we see an upward trajectory ahead. Investing in future launches. Another cycle overlaying that one is the launch process and the sports process for Catena Media. We've three phases to the investment for future launches, whether that is the NFL season launch starting in a few weeks, our new partnership launches with Lee and The Sporting News, or states like Kentucky, Maine, and North Carolina launching. In one phase, we invest in our teams, the technologies, essentially setting up the playbook, so to speak. This is a lot of what we do in Q2 and early Q3 here at Catena Media for the NFL, and this year, Kentucky, and we'll be doing over Q4 for North Carolina. Phase two is the launch, maximizing initial spikes of day one traffic and cross-channel campaigns. This is something we've become exceptional at at this company over the last few years. Phase three is the now live market and constant development across the seasonal sports calendar. We see numerous ways to amplify this cycle, be it with improving technology and AI and BI re-resourcing to maximize each phase while reducing expenditures. There's also the revenue model. Revenue is cyclic in our current business. The launch of sports seasons or states leads to the aforementioned spike in traffic. We can and will affiliate, thanks to preparations and positioning. As we are heavily CPA-weighted in North America today, that means this further amplifies this cyclic nature. A revenue surge occurs at the start of a season or market. It then falls off or comes to, over a period of time, a market equilibrium. Our ways to try to reduce this cyclic impact is by adding these media partnerships to further reach after market equilibrium, as well as our shift towards rev share and hybrid deals. We continue to increase the number of players we are delivering to operators in North America on revenue share. While still a smaller volume than CPA, which today still has a higher net present value than the revenue, revenue share terms many operators are offering in that market, we do expect this trend toward revenue share will continue to grow. In sum, there are multiple overlapping cycles: state launches, sports seasonalities, Catena Media's launch processes, and the revenue model that create waves within our business. While we are seeing the backside of one of them in Q2, we do expect those to move forward in up direction in the coming quarters and even larger peaks, likely in the coming years, even with us trying to flatten some of them with items like revenue share. Thus, we remain committed to our targets, the 2025 targets for North America for revenues and margin, as well as reaching net cash positive position this year, as we're essentially at that point and that solid financial position, position this gives us. We are confident of the successful future for Catena Media, as regardless of how some of these cycles may transpire, faster, slower state launches, better or worse NFL playoff lineups, or the challenge of the many competitors who enter the space later than Catena Media, we now have multiple levers we are pulling, namely, paid media expansion, our historic strength and organic, which is still the highest margin part of this industry, and these new media partnerships, all three levers being fed from our exceptional teams producing high-quality content, utilizing constantly improving technical platforms. We're moving to a more controllable growth story as we find checks and balances for the many cycles of our business encounters and continue to see its very strong future in the coming years and quarters. Key takeaways. We have had tougher conditions caused by increased competition from entrants to the market coming in later than when we entered North America, and lower marketing spend as operators try to reach their own equilibriums on profitability, which we're now seeing that stabilization. Successful efforts in building traffic at core assets in esports in Latin America. Share buybacks and bond repurchases to increase shareholder value and reduce financial risk. Approaching a net cash positive position, ensuring an agile business ready to capitalize on opportunities, of which there are many ahead. Top priorities include expanding media partnerships, increasing paid media, maintaining top rankings, and further strengthening our strong position ahead of state launches. That's our Q2 presentation. We'll now turn it to questions. Thank you. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Oscar Rönnqvist from ABG. Please go ahead. Thank you, and good morning, guys. I would just start off with the North American margin, which seems to be decent in, in, in overall sense. I mean, note that the costs are, I wouldn't say put to shared centrals, or maybe you can just share on the dynamics there, because I think that, like, central costs are up more than 100% from Q1. Just wondering if you could expand a little bit on the dynamics there and what we could expect in sort of the central operations, EBITDA loss, in the coming quarters, if you could quantify that, please. Thank you. Sure. Do you want to start with that on, Ed? I will start with that. I can go ahead. Thank you, Oscar, for the question, valid question. In, in terms of the central costs and the fluctuation in regards to central costs, is, is primarily a result of continuing versus discontinuing operations and the services providing the, during the transition of assets we have. There is no change in terms of central costs versus the North America and the North American margin. Okay. so we can assume that, I mean, the central operations, EBITDA loss, will decrease in the coming few quarters, let's say from Q4 onwards? Correct. Perfect. Thank you. Then just, maybe for Michael, just on the 2025 revenue target of exceeding or reaching $125 million. I would just wonder, I think we have talked about this before, but I mean, just the sort of number that you have figured out there in just the $125 million, it's a pretty long way there from the current run rates, as you are aware of. Just thinking of the sort of visibility into 2025 and the sort of assumptions when you're modeling the 2025 revenue, what types of launches do we actually need to see? I mean, are you assuming, let's say, California, Texas, for the big states coming in, and New York, maybe regulating iGaming, or, or how should we think about that? Absolutely. We have, we've set a, a target that is a achievable but challenging goal because that's what we believe at Catena Media. It does involve a number of additional state launches over the period, such as North Carolina, which is expected in 2024. It does involve a number of states in sports and, a couple, in casino. We were using Eilers and Krejcik's market expectations at the time, which is one of those, followed by the industry on what states might regulate. Believe in there was included New York for iGaming sometime in 2025. It does not involve California launching, though California would be a boon to the industry if it should reach it, but it is unclear at what point it will. Texas, I don't believe, also was included in that model for 2025, but a number of states to be added to the portfolio of mid-sized states for sports, and at least one significant player for casino. On top of that, where we come in with the things we drive ourselves are these additional media partnerships, expanding into paid media areas we know work and have decent margins, and we've been optimizing the highest margin parts of our business, and now it's time for us to expand further. Those are all parts of the plan. Perfect. Thank you. Just to get a sense of sort of the modeling in the shorter term here, you are saying that you want to expand your revenue share agreements, and also just sort of considering the, the impact, from the NDC growth being down more than the top line currently, just in, in terms of, I mean, what we can expect for, for the revenue share deals upcoming when we have seen, I mean, pretty slow NDCs. Is that sort of, I mean, because of the lower demand at the moment, or are you focusing more on, on high-value players? Just also on the paid media focus that you put out, just wanted to get a sense of the, the dynamics there as well. Are you going for hybrid or revenue share deals, or, or is that CPA focused? I'm just trying to get a sense of what we can expect for the margin in the coming few quarters. Thanks. Certainly. We are always focused on high-value player, because that is what the operators are put in the highest demand. We have seen a decline in NDCs currently. That is also part for us, as part of the way we cycle in our seasonality. We have seen increased competition, they are using tools to gain some of those NDCs and target those, where we target is to hold the highest value ones, which again, brings us the greatest return on that investment. Adding paid media and the media partnerships ourselves, which we've been carefully selecting those which will amplify our position and not just dilute it or compete against our own strong organic positions. Those are also going to be a combination of CPA and revenue share, as that is typically a deal by the operator and not by the specific channel by which we deliver. They expect, regardless of what channel we deliver, it will be the value that they are used to receiving from Catena Media. All right. Just on increased focus on paid media should dampen the margin, I suppose, over the coming few quarters, and also the revenue share deals could weigh on top line just over the coming, let's say, 2-3 quarters. Am I correct in assuming that? The revenue share deals will weigh on the top line over the coming quarters as we see that position increase for the long term. That is, that is definite. How much so depends on the speed of transition. We are trying to manage that. We've not gone all in on revenue share. Again, some of the operators deals are not there yet either. At the same time, we are pushing forward on those revenue share deals. In terms of paid media and these media partnerships, that does bring additional direct costs as there is a share to distribute of the revenues to these partners in those in those efforts. Whether it be Google for the cost of paid media or whether it be the media partners that we're happy to work with, and they help us bring additional traffic, and we have to share in that. There will be additional costs on those streams. Again, we do still have a very strong core to our company anyways, of this organic search that we have maximized over these last few years and will continue to drive those positions. I think that helps us keep a higher overall margin mix. Got it. I won't stall you for too long, but I just have one final question. Just on the casino revenue coming down 23% quarter-over-quarter in North America. Just wanted to get a sense of the seasonality impact, because I was assuming that it would have, I mean, less lumpy revenue from, from that division. Also, I mean, now that you are putting out July numbers that are significantly better in terms of organic growth versus the, the Q2 levels, could you just, like, talk about the comps, or have we seen, like, a steep improvement in, in July? We've seen an improvement in July, absolutely. We have seen, and we have been hit by some competition on those that maybe talk about sports a lot, but starting to really target casino as they recognize that it is an opportunity for them to potentially take market share. You know, we have offset that, and we are starting to work within that new environment as others try to target that. That is, I believe, reflected in what we're seeing in July versus Q2 as we start to bring our, our powers to bear on those, those competitors. Understood. That was all for me. Thank you very much. There are no more questions at this time. I hand the conference back to the speakers for any written questions or closing comments. Okay, perfect. Then I'll continue with the, with some questions that we received in the, in the chat and over email. The first one, Michael, is, is for you to, to respond to. Is the stiffer competition in North America a real threat to our financial goals for 2025? Thanks, Erik. As I was just talking with Oscar, there is more competition in North America. We came in very strong over the last 5 years, grew tens and millions in revenues at a very high margin with our organic search playbook. We still hold the strongest position in that, but there is more competition, not unexpected by us. In a, in a lucrative market like North America, as others figured out how to work within a regulated environment, which some have and others are still figuring out, there is more competition. Does this keep us from having our financial goals met? Absolutely not. We've expected this. We now start to amplify those levers, which, as I said to Oscar, are lower margin elements of the business, but will drive top line and bottom line growth. They've just been not the areas to optimize for us. Why would we do a media partnership to improve domain strength if we were already top on certain keywords? We wouldn't. With competition, the market shifts, and some of those domain strengths of long-standing media organizations have more impact in markets like New Jersey, where NJ.com, our Advance Local partnership, very strong for us in this quarter and will continue. Those dynamics will impact us, absolutely. Our margins will be changed as we have some more on the direct spend side of things for influence, et cetera, in this more competitive marketplace. We're ready to compete, we can compete, and we will meet our goals in a competitive marketplace. Thank you, Michael. I will continue answering a question which is, is more related to the financials. What is the plan for paying down the debt, as the interest rate expense is currently very high, and it's obviously a huge part of Catena Media's current cash flow? In relation to the debt situation and, and where we are giving our cash position and the, the outlook with the, with the proceeds, we have in the pipe, we are, of course, looking into reducing our debt levels. That is, is one of our priorities the coming period, as well as balancing that with, with potential share buybacks. We currently have a share buyback program launched. We will for sure look into how we can optimize the use of that going forward, as well as potentially also looking into acquisitions in the M&A in the Americas. We have some alternatives in terms of how we can utilize our cash base, but paying down debt is definitely on the agenda. Moving over to a question to you again, Michael, and the question is around media partnerships. What is the expense in relation to media partnership that we have with sites like sportingnews.com? How are they compensated? Is it one-time fees, monthly fees, or do we split the revenues with those sites, or how does the model normally work? Yes. These models are partnerships, so that's the way at least Catena Media structures these. We work with the partners. They help bring domain strength on certain keywords. They bring a large potential player base from the traffic they do across their portfolios of news and information. We amplify those by adding sports betting-specific content and optimization techniques that we have developed from our business. These are partnerships, so they are essentially sharing in the revenue that the business makes from those partnerships of the two elements. It is not a one-time fee. It is a continuing relationship where we both profit if the relationship works well. Very good. Thank you. Moving ahead with another question for you, Michael. I'm combining two questions. It's around the strategic direction and the focus and focusing all efforts on North America seem to be shrinking the business, and what opportunities do we have to grow the overall business? Then also in relation to that, what can we expect out of markets such as Latin America, and what do we expect out of Brazil? Certainly. The North American focus is focusing on the highest return on investment market in the globe at this point. As we noted during the presentation, we have some cycles there, but we have a very significant cycle ahead still in North America for casino and sports. We are optimizing the business for that. It allows for a much more streamlined business than Catena Media has done in the past, thus some of the cost-saving efforts underway as we divested certain parts of Europe and other gray market to black market, potentially now based on regulation changes, businesses such as AskGamblers. We are streamlining, and we are focusing on the Americas. It is beyond North America Latin America also shows great potential and as it regulates, as we see Brazil move towards a regulated market, and we see opportunities there, starting with organic and then growing up along these other channels, with media partnerships, such as with The Sporting News, which again, allows us to directly target many of those markets with a much larger audience than we have today in any of them. This focus is to make the maximum return on investment. Yes, there are cycles, there are ways. There is more competition there than there has been. It is still extremely high-margin business compared to anything else we were doing anywhere else or are doing anywhere else in the world. So it is a primary focus of this business at the moment. Obviously, we are still very happy and working with our Italian teams in Europe, where they do a strong business in casino and sports as well. There are still other elements to our business, but the North American focus is the focus for now, LatAm probably behind that. I expect strong things ahead from the Americas and from Catena Media, and I would not define it as shrinking the business. Thank you. The question that I, I will give my, my view on, but feel free to add as well. Michael, could you expand a bit on how your structure will look like? Again, coming back to what we have announced and the cost focus we have in the company, what is as a reduction of cost, divesting the U.K. and Australian business primarily, then the cost reduction program that we announced at the beginning of August will be for... expect about 90% of the effect to be achieved here by year-end. The range we gave in that program was 3.8 to 4.0 savings on a yearly basis, primarily related to central cost functions. Continue to, to look into cost optimization going forward, and, and that is, of course, something we have with us. At the same time, we are looking into how we can grow our business on our core markets, making sure we invest in those markets as well. So that's elaborating a bit on the cost structure, going forward. Anything to add there from your perspective, Michael? No, I think you pretty well covered that. ... Very good. another question in in regards to finance is if we will launch a new share buyback program once the current has has been conducted. as I said before, in regards to share buybacks, bond repurchases, and and potential other activities and tools we can use, we will continue to look into that to make sure we optimize the best the best way forward, given the strong financial position we are in. we will use the tools and the possibilities we have. As the debt levels are, or the interest rates on debts are currently quite high, that is, of course, one option, but of course, to create further shareholder value through share buybacks is, is for sure something we will have on the agenda, and there is room for that given the decision on the EGM held lately. Question to you, Michael, do you believe we can turn around the North American assets to actually grow again? You've been touching that a bit, but any other- Happy to take it as direct as that. That is absolutely the case. We are. We optimize for organic search, and we've been maximizing that channel. We've seen more competition. The North American assets are still very strong in that for new state launches, of which there are many ahead. Meanwhile, we pull these other levers of paid media and media partnerships and some others that are in the, in the mix, and those all bring additional top and bottom line growth that we're not seeing today or in Q2, that you'll see in the coming quarters. We know these things work. We've just been slower to start on some of them because they are lower margin. But now the competitive environment is, mix has become what it is, and it is time to start to amplify those portions of the portfolio. Yes, we will absolutely be growing the business in the coming quarters. Thank you. Very good. I can see we receive a few questions around the timing of the cost reduction program, when to expect those savings, and just a very short comment on that. It's a process, and as we have announced, we have the expected range, and we will come back to that later in terms of in what quarters you'll see the actual effects. But as of now, that's the information we give around the cost reduction program, and that we, at year-end, expect 90% of that to be realized. I believe that was the main questions we have received. Any final remarks from your perspective, Michael? First, I want to thank everyone for their interest in Catena Media and their joining us for the call today. Catena Media enters this chapter of later 2023 and beyond with numerous things on our plate that we are going to be able to capitalize on, from state launches and sports seasonality to CPA shifting to rev share, to new models within our affiliation portfolio, such as paid media and media partnerships. We look forward to quarters ahead of growth and diversification of those types of growth to give us a more robust company for the mid and long game, which are really just getting underway in the markets that we're targeting. With that, I'd like to thank you, Erik, and thank everyone for joining us, and we will talk to you again after the Q3. Thank you.