Castellum, Inc. Price & Performance (CTM)

During the quarter, we have discontinued the AI content generation platform joint venture and recovered €700,000 of the original investment. We continue to see AI as an important business enhancer, for example, in scaling up content output and quality, However, the new board and management did not deem this particular venture to be the optimal way to realize the opportunity. We have achieved a positive net cash position in February 2025 after the receipt of the final payment from the S. Gambler sale. This cash will be used to repay the senior bond in June twenty twenty five. Moving on to the financial summary. Q4 revenue from continuing operations was €10,200,000 down 30% from the previous year and down 5% from the previous quarter. Adjusted EBITDA was €1,500,000 up 2% from the previous year and up 13% from the previous quarter. Adjusted EBITDA margin was 15% up five percentage points from the previous year and 10 percentage points up from Q2 twenty twenty four, and the highest level since Q3 twenty twenty three. North America contributed 87% of the group revenue up from 85% in the same period last year. From segment perspective, sports remains challenging with continued underperformance in Q4 negatively affecting our quarterly margin.

North American casino revenue decreased 12% year on year However, we maintained a healthy margin for this segment. Mike will go into further details regarding the geographical and segment results later in the presentation. In the Q2 report, we started showcasing our average ranking score for the 70 plus most important keywords across Catina Media's Catena and operated products. The core of the keywords remains mostly unchanged but factors like seasonality, new segments or new markets may result in changes to the list. After the core album update, after Google's core Algo update in August, September, Google had unexpected back to back updates in November and December. This resulted in a higher than normal volatility during the quarter. At the end of the period, our average score was 5.35, the highest, meaning the worst, score since we started measuring and reporting this indicator. However, it's important to look at the score throughout the quarter. At the end of the quarter, as at the end of the quarter, the number is not necessarily representative for the entire quarter. On a positive note, we can see that while Google's core updates may have had an initial negative impact on some of our products, we are generally able to identify solutions and recover the rankings.

I will now hand off to Mike to give an in-depth update on our financial performance.

Thank you, Manu, and good morning. Moving into our financial analysis from a geographical split perspective. We concluded the quarter at €8,900,000 in revenue in North America. Down from €12,300,000 for the corresponding quarter last year and down 6% from the $9,500,000 that we saw in Q3 twenty twenty four. Adjusted EBITDA in North America increased to $4,500,000 4% higher than last year corresponding to a margin of 51%. A 15 percentage point increase versus last year. [indiscernible] Adjusted EBITDA is marginally higher than Q3 twenty twenty four, despite €600,000 lower revenue in the quarter. Reflecting the effectiveness of our cost management programs, North America amounted to 87% of group revenue in the quarter, an increase of two percentage points from last year. Looking deeper at our North America segments, sports was down 56% versus last year. This poor performance was driven by increased competition and to a lesser Catena, the lack of a comparable state launch. Kentucky launched at the very September 2023 and had a trailing effect extending into October 2023.

Our North America sports business grew by 6% versus Q3 twenty twenty four. While this is not as much growth as we would have liked to have seen in the quarter, there's a welcome shift from seasonally adjusted sports declines in recent quarters. North America casino business decreased by 12% versus Q4 twenty twenty three. This was also a contraction of 9% versus Q3 twenty twenty four. Caused by competitive pressures driven by the volatile search rankings experienced through multiple Google core algorithm updates. Looking at the rest of this world, this non core geographical segment accounted for 13% of revenue, and contains our esports, APAC and Latin America businesses. We saw revenue of €1,300,000 which is a decrease of 41% versus last Adjusted EBITDA decreased by 31% versus last year However, our margin increased to 50% as we decreased cost to align with the revenue trends. [indiscernible] Moving into our full company segment performance, we saw a very large decline in our sports revenue. To €2,500,000 versus €5,700,000 for Q4 twenty twenty three. NDCs also decreased in sports by 45%. As mentioned previously, this was driven by underperformance at several brands. Challenging comparables from the Kentucky launch at the very September 2023 which extended into October 2023.

Our sports business grew modestly by 2% versus Q3 twenty twenty four. As mentioned earlier, the North America sports business actually grew by 6% However, declines from our esports business and revenue share churn from remaining European assets impacted the overall segment growth. Losses in our sports business decreased by 42% versus last year, as cost control measures took effect. Continue to invest adequately in this segment to turn it around and return to profitability. The casino segment accounted for 75% of group revenue. Revenue decreased by 15% versus the previous year while NDCs increased by 11%. The Rest of World business, which is primarily legacy revenue share from non core assets, decreased by 39% versus last year. North America casino business decreased by 12% versus last year. This minor yet disappointing decrease was a result of the tumultuous quarter [indiscernible] Casino margins decreased by 3% versus the same quarter in 2023.

The impact of our cost management programs maintained relatively high margins despite the 15% decrease in revenue. And despite a 7% quarterly decrease in casino revenue, the Catena segment margin actually improved by two percentage points versus Q3 twenty twenty four. That preserved margin can be attributed to our continued cost management programs. Continuing on to our cost development. We further decreased our cost base in Q4 twenty twenty four by rolling out the new operating model, implementing cost management programs, and terminating unfavorable media partnerships. Our adjusted cost base decreased by 33% versus Q4 twenty twenty three. And 7% versus Q3 twenty twenty four. Our adjusted EBITDA margin for Q4 twenty twenty four landed at 15%, increasing for two consecutive quarters from our low of 5% in Q2 twenty twenty four. We feel that we now have the right sized cost base to fuel sustainable organic growth in 2025. We do not anticipate any further major changes to our cost base at this time. But we do expect direct cost to fluctuate alongside the profitable growth of our media our paid media, sub affiliate and the newly reset media partnerships over the next few quarters. Comparability were €800,000 in the quarter, The vast majority of these were associated with restructuring redundancy costs including those associated with previously announced headcount reductions.

Moving on to our financial position. Despite another consecutive quarter of minimal cash flows from operations, the receipts from proceeds of our divested assets through the strategic review continue to put us in a healthy financial position. We decreased interest costs by repaying the outstanding €10,000,000 balance on a revolving credit facility in Q4. And our only remaining debt is the unsecured senior bond which is due in June 2025. [indiscernible] All proceeds from divested assets have been received on time including the final payment associated with the AskGamblers divestment which arrived in early February twenty twenty five. As a result, the company is now in a net cash position, excluding the hybrid capital securities, which do not have a maturity date. We will use current cash and the remaining outstanding proceeds from divested assets to repay the senior bond due in June 2025. If we now look at our capital structure, our cash balance at the end of the quarter was €8,500,000 We reported a net debt of €12,900,000 at the December. This puts us in a net cash position at the end of the year of €5,600,000 excluding the hybrid capital securities. After adjusting for scheduled inflow of €18,500,000 in divest proceeds during Q1 and Q2, And as mentioned previously, dollars 15,000,000 of those proceeds have now So we're already in a net cash position.

It is important to note that the final proceeds from past divestments are not and all payments to date have been received according to plan. We will use our net cash position and upcoming proceeds from past divestments to repay the senior bond due in June. We currently have no outstanding financial commitments relating to prior acquisitions. I will now hand back over to Manu to give us an update on the strategy and outlook.

We will now have a look into the strategy and outlook for the next few quarters. During the quarter, we have not had any US state launches. Meaning that the overall market penetration remains at approximately 50% for online sports betting and only 16% for Catena. Indicating a remaining sizable future opportunity. In 2025, we expect two new market loan launches in North America, Missouri following the November 24 ballot vote, Missouri Gaming Commission is drafting the online sports wagering regulations and the market is expected to go live sometime in the second half of the year. Alberta, the legislation is expected to be introduced in the spring of twenty twenty five with no launch date set yet. Alberta will have a model similar to Ontario, including both online sports betting and online casino. Lastly, other casino bills recently introduced include New York, Indiana and Illinois, but these are still in the very early stages with less chances to succeed. As laid out in the previous reports, our current strategy is focused on three key pillars: people, product and profit. From people perspective, the key initiatives in the quarter include the implementation of an OKR system meant to create alignment and accountability across the organization.

The strengthening of our leadership team with key hirings, such as directors of data, director of SEO, director of engineering, the streamlining of the content organization, resulting in a net reduction and the initiation of a return to office hybrid program, which will be fully implemented in the second half of the year, and will focus on two hubs, our existing European hub in Malta and a newly created North American hub in Miami.

From product perspective, we have continued to focus our efforts to align with Google's best practices and improve the performance and accessibility of our product. We secured an exciting exclusive partnership with the Daily Racing Forum to bring best in class sports betting content and promotions to the DRF customers. This is a great example of the type of strategic partnerships we're seeking to build one that is designed to drive sustainability, profitability, sustainable profitability for both parties. We further enhanced our CRM capabilities, allowing us to build an engaged and loyal customer database. And we have discontinued the AI content generation platform joint venture and recovered €700,000 of the original investment. We continue to see it as an important business enhancer for example, in scaling up content output and quality. Our third and last strategic pillar is profit. We are pleased with the second consecutive quarter of improved profitability as our adjusted EBITDA margin reached the highest level since Q3 twenty twenty three. The cost reduction measures implemented during the quarter are expecting to generate an annual cost saving of €2,200,000 The cost base was reduced by 33% from Q4 twenty And we are confident we have rightsized the cost base to fuel sustainable organic growth in 2025.

Lastly, let's recap the key takeaways from our report. First, we are pleased with the second consecutive quarter of improved profitability as our adjusted EBITDA margin reached its highest level since Q3 of twenty twenty three. However, ongoing focus to stabilize the revenue levels as the return to growth will take additional time. Continued implementation of the new product led operating model was clear focus and priorities Regulation in North America remains slow, with very few expecting new states or province openings in 2025. Focus on growth in existing geographies and products, And lastly, we are now in a positive net cash position excluding the hybrid capital securities, which we achieved Listening. I will now hand over to Mike to move on to the Q and A session of our report and open up [indiscernible] Thank you, Manu. I'll now open it up for questions. So our first caller is Oscar from ABG. And Oscar, you've been added into the call now and like to see if you have any questions for us.

Perfect. Thank you. Good morning, guys. Just first on the North America CBA levels. So I think that the revenue is declining a little bit more than the NDCs at the moment. So just do you see any sort of continued cost or continued pressure on the CPA levels at the moment? And also if you could talk a little bit about the the outlook as you're hearing from the operators. So do you see any sort of evidence of them being a little bit more positive on on increasing the spend on affiliates at the moment? Or do you still see a sort of Pretty slow market. Thank you.

Hi, Oscar. Good morning. So I think two parts to that. The first one, the slightly drop in the average CPA level. So I think there are different numbers of different number of reasons that are contributing to that. First of all, as you point out, the pressure from the operators and the operators aiming optimize their margins. Secondly, I think for us, it's important to note the distribution of where the new depositing customers are coming from. First of all, from an operator perspective, obviously, there are different different deals and different types of arrangements. And secondly, also the district [indiscernible] all those play part into where we ended up with with the average CPA number. But overall, as you point out, there's a slight drop quarter on quarter. I think going forward, the operators will continue to try to apply pressure and optimize their margins. What we're trying to do on our side is to package good deals for operators. So not necessarily just from the traditional way of looking at things, but trying to include CRM, trying to include other benefits for the operators, including communication to players videos and other channels. So overall, I think we've we've managed to secure good long term deals with some of our key partners.

But overall, we do continue to see the pressure on CPA.

Got it. Thank you. Then just on any comments on sweeps, both on the performance side and also on the outlook? So we've seen a bit of news recently that there could be some regulatory pressure in some states. I think it was Mississippi the last one. Could you talk a little bit about, I mean, performance and the outlook that you see on the sweep side? Thanks.

Absolutely. So from performance perspectives, sweeps continues to grow. We're looking at it as the overall for us, Sweeps is an immediate strategy, but also a future term bulletproof for the casino segment, trying to build our brand and our database for states that are yet to regulate. Again, when you reiterate the fact that only 16% of The US population leave lives in states where casino regulation is already in place. So there's a future massive opportunity Sweets represents that gateway for us to put ourselves in the best possible position for when that happens. So we continue to invest and we continue to grow the Swift segment. It remains one of our fastest growing verticals within Q4, in Q4. Regarding the the regulatory pressure, I think we continue to see some pressure from some of the states so far, we haven't seen any of the bigger states, if you will, doing anything or taking any actions. So I think for time being, we're still in a very good position, and we continue to monitor [indiscernible] to to put us in a position that we need to be concerned about the immediate future of sweepstakes. Mike, if you want to add anything to that, please do.

I think you've covered that off well. Thank you, Manav.

Understood. Thanks. So do you have any sort of comments to give on what you have in terms of positions from the iCasino or the states that maybe launching iCasino in the near future? You talked about Newark and Indiana bills for instance. So is there any sort of regional exposure in the sweeps where you are well positioned ahead of the regulation?

I think so. Without disclosing we have not communicated the distribution per state in The U. S. Per geography. But as you can imagine, New York is one of the largest states in The U. S. And from Swift's perspective is one of the the states where we see the highest amount of traffic and revenues coming. So yes, I think we are generally in a very good position in the larger states in The U. S. So that would be beneficial for us, the potential regulation in the bigger states.

Perfect. Thanks. Next one is just on the financial targets So you do target double digit growth in revenue and EBITDA. And I mean, You have seen the revenue run rate maybe decrease a little bit during 2024. You're facing quite tough comps in H1. Including the North Carolina launch in Q1 twenty twenty four. [indiscernible] volatile, but ended a little bit lower in December. So just on the sort of confidence level going into 2025 guidance, is there any sort of immediate uptick that you see from from the new strategy that you have?

Yes. Thanks, Oscar. That's a great question. I think as as we said in the presentation, we're happy to see the profitability improving, but our measures to drive up the revenue are obviously taking longer than anticipated. I think being the positive there, We see the top line drop being at its lowest level for a long period of time, which is somewhat encouraging. So hopefully, that is the the bottom line of our revenues and we can get back to growth shortly. In terms of the comparables with last year, you're absolutely right. Q1 is by far the highest revenue generator or revenue recorded in 2024. The comparables are slowing down into Q3 Q3, Q4. So I think we're highly confident about the 2025 return to growth and double digit organic growth. However, as you point out, Q1 is is a bit challenging as we have very tough comparables from last year. So I think that's the summary in my view. I think we managed to slow down the drop in revenue. We obviously media partnerships played a role into that into the revenues in the first half of the year. State launches in North Carolina, as you point out, played a part into March, April, last year.

So we have those, but if we exclude those from [indiscernible] we believe that the initiatives we put in place will pay out. It's right now the reality that they have not paid out in the time that we're expecting initially, but we're still confident that we have the right strategy in place and we have the right structure [indiscernible] Great. Thanks. And then just a final one we take a step back from the sort of excluding the market pressure that we see at moment on the affiliation, side. So how do you see the competitive landscape developing? I think you talked a little bit about especially in Q3 that you saw increased competition. Still see new affiliates entering the market bigger pressure from the operators that are already in the market? Or is there any change of that? Or do you still feel that you are well positioned to capture any sort of growth that could come into 2025?

So I think a combination of the two, I think we definitely see increased competition. We I think the lack of state launches also adds to that Competitors are focusing on the same markets as we are. The lack of new launches means less distraction, if you will, so everybody trying to focus their existing footprint and trying to focus on that. So I think we do see that. We do see a high number of operators, and I think that applies for both sports and casino. But again, coming back to where we stand, I think we have very strong products that have unfortunately underperformed for a number of quarters. But with the right strategy and the right structure, I we can We can position those products to be leading products in the market. I think we have some really great assets, including bonus.com play with, say, the regional network that are very, very valuable for us, and we with the right strategy and right initiatives in place, again, highly confident that this year we can return to growth.

Perfect. That was all for me. Thank you very much, guys. Thank you, Oscar. All right. Thank you, Oscar.

That's the end of the requested people to call in. So I'm going to move to a few written questions that have been submitted.

So I just have one here. For you, Manu.

Which is, will you do further layoffs or cost cuts going forward?

Thanks, Mike. I think two parts to that. Obviously, as any business, we're always evaluating the efficiency. And we're always looking to optimize our profitability. I think we've done a good job in the last two quarters, but it doesn't end here. We continue to do that. And I'm sure there may be opportunities as we progress. Regarding layouts per se right now, as I said, we're confident that we have the structure we have structured team in an optimal manner. We have much flat organization that we did in the past, and it's all aligned behind the product focused setup that we have put in place. The introduction of OKRs, again, may sound like a basic step, but I think it's a great tool to align the entire organization behind it. So for time being, I think we have the right setup and the right structure [indiscernible] further staff costs anywhere in the near future. But as I said, we're always evaluating our efficiency and continue to look to optimize going forward.

Thanks. And I'll also add on that one that in the section I went through on the cost developments, we do expect the direct costs to fluctuate a bit just in line with performance of those kind of more performance based campaigns that go with media partnerships and sub affiliation and paid media. So we do expect those to move around. But from a cost cutting perspective, there's nothing major on the horizon. I have one more question that came in for you, Manu. Which is why did you discontinue the joint venture? And I think they're talking about the AI based content generation joint venture. [indiscernible] I think that the short story is that after careful evaluation, we decided to discontinue. And also acquire 100% of the business before liquidating it. But as part of the agreement, we managed to recoup €700,000 of the original investment, which obviously it's it's a significant amount of cash that we can deploy elsewhere. As we continue to see AI as an important part of our business, as we said in the report, we did not deem these particular this particular deal to be or this particular product to be the right venture for us to realize the AI opportunity.

So I think that's the key part in there. We we still believe in the vertical, but this was not it for us. We have 700,000.0 cash out of the finalization of that agreement and we'll look to deploy that elsewhere and continue to to focus on the AI vertical one or another.

All right. Thank you. There's a couple of questions that have come in that are more on the financing side. So take those. So there's actually two that are related to the hybrid capital. So I'll try to kind of summarize those together, which is with a weaker revenue profile how will we manage the interest payments on the outstanding bond and hybrid And also does our financial target regarding net interest bearing debt to adjusted EBITDA include the hybrid securities. So since they're both related, we'll kind of take those together, which is easy one is no. The hybrid securities are treated as an equity in accordance with IFRS. So they're not part of the noncurrent liabilities from an accounting perspective in our financial statements. Important to note that they don't have it and the reason they're considered that is that they don't have a maturity date, so there's no forced repayment on those. When we look at the revenue profile and how we're going to manage the interest payments, And I'd like to say there is that our main focus is about how we resolve our senior debt and the revolving credit facility. The revolving credit facility we paid back in Q4, and the idea there was to kind of decrease the interest payments right away where we could.

And then with the payment that we've already received from Mass Gamblers, we're going to be able to redeem the senior bond in June. So that's the plan that we've been talking about for quite a while when it comes to what we're doing with proceeds from the strategic review. When you take into consideration the removal of the senior debt, and the RCF, sorry, the senior bond, The interest on the hybrids although that steps up in July this year our actual total interest costs will be significantly lower in comparison to where it's been for the past few years.

So right now, since the hybrids offer a lot of flexibility in their perpetual, we'll explore other alternatives that are there. But right now we're probably going to stick with the hybrids and we're not considering any dilutive actions for the company. So our intention is to pay the interest costs and then As things develop, see if there are better more cost efficient ways to finance the company on that side of things. All right, we have one more question that came through. And this is I have been a shareholder for a few years. I'm wondering if you will have to raise more capital during the year, for example, through an emission. Okay? Well, I guess kind of answered that in the previous question, which is as of today, we do not foresee any dilutive actions for the company. We're not looking at doing an equity issuance in order to repay the hybrid and we'll be paying the other debt instruments or interest bearing instruments off by the end of the year using available cash. So that's not in the plans as of today. I'm just checking to see if any more questions have come through. And I don't think they have.

So I'm going to hand it back over to Manu for final statements.

Thank you, Mike, and thank you everybody for listening in and for the questions. Just to recap, during the quarter, we have made significant efforts to improve our profitability and we are pleased to see for two consecutive quarters that we were able to improve our margin and also reach out the highest profitability margin since Q3 of twenty twenty three.

So, kudos to the team for the work, for the effort put there, and for the results. And also equally important during the quarter, we have as we said, we have not managed to improve our top line, which remains a focus area for us. Our actions have proven to take longer than we expected initially to pay dividends. So we're we continue to push on developing our products and do the right things in the long run. So we're confident that we will record that double digit organic growth in revenue and adjusted EBITDA by by the end of the year. With that, I thank you all for joining today's call, and we look forward to hosting you on for the report on May 13. Thank you very much, and have a great rest of the week. Good morning, everyone. Welcome to Cata Media's Q4 Interim Report. I am Manuel Stann, and today I am joined by our Chief Financial Officer, Mike Duro. Today, we will be speaking to our Q4 interim report related financials and our strategy and outlook. Will start today's presentation with a high level summary of the most important developments in the quarter. During the quarter, we have continued to improve our profitability.

As we saw second consecutive quarterly improvement while reaching the highest adjusted EBITDA margin since Q3 twenty twenty three. This was the result of the team's continuous efforts on efficiency across the entire The revenue side, however, remained under pressure as measures to focus the group on new strategic priorities and gaining traction more slowly than anticipated. From people perspective, we continued the work on implementing and refining our new product focused operating model.

To improve the alignment and accountability across the organization, we have implemented an objective and key result system OKR, in aligning all personnel around our key priorities and ensuring the focus of the highest impact areas. Another highlight in the quarter was the exclusive collaboration with Daily Racing Form, a blueprint for such strategic media partnerships that we are seeking. During the quarter, we have discontinued the AI content generation platform joint venture and recovered €700,000 of the original investment. We continue to see AI as an important business enhancer. For example, in scaling up content output and quality, However, the new board and management did not deem this particular venture to be the optimal way to realize the opportunity.

We have achieved a positive net cash position in February 2025 after the receipt of the final payment from the Ask Gambler sale. This cash will be used to repay the senior bond in June twenty twenty five. Moving on to the financial summary. Q4 revenue from continuing operations was €10,200,000 down 30% from the previous year and down 5% from the previous quarter. Adjusted EBITDA was €1,500,000 up 2% from the previous year and up 13% from the previous quarter. Adjusted EBITDA margin was 15%, up five percentage points from the previous year and 10 percentage points up from Q2 twenty twenty four and the highest level since Q3 twenty twenty three. North America contributed 87% of the group revenue, up from 85% in the same period last year. From segment perspective, sports remains challenging with continued underperformance in Q4, negatively affecting our quarterly margin. North American casino revenue decreased 12% year on year However, we maintained a healthy margin for this segment. Mike will go into further details regarding the geographical and segment results later in the presentation. In the Q2 report, we started showcasing our average ranking score for the 70 plus most important keywords across Catina Media's Catena and operated products.

The core of the keywords remains mostly unchanged but factors like seasonality, new segments or new markets may result in changes to the list. After the core Algo update, after Google's core Algo update in August, September, Google had unexpected back to back updates in November and December. This resulted in a higher than normal volatility during the quarter. At the end of the period, our average score was 5.35, the highest, meaning the worst, score since we started measuring and reporting this indicator. However, it's important to look at the score throughout the quarter at the end of the quarter at the end of the quarter, the number is not necessarily representative for the entire quarter. On a positive note, we can see that while Google's core updates may have had an initial negative impact on some of our products, we are generally able to identify solutions and recover the rankings. I will now hand off to Mike to give an in-depth update on our financial performance.

Thank you, Manu, and good morning. Moving into our financial analysis from a geographic split perspective. We concluded the quarter at €8,900,000 in revenue in North America. Down from €12,300,000 for the corresponding quarter last year and down 6% from the $9,500,000 that we saw in Q3 twenty twenty four. Adjusted EBITDA in North America increased to $4,500,000 4% higher than last year corresponding to a margin of 51%. A 15 percentage point increase versus last year. [indiscernible] Adjusted EBITDA is marginally higher than Q3 twenty twenty four, despite €600,000 lower revenue in the quarter, reflecting the effectiveness of our cost management programs. North America amounted to 87% of group revenue in the quarter. An increase of two percentage points from last year. Looking deeper at our North America segments, sports was down 56% versus last year. This poor performance was driven by increased competition and to a lesser Catena, the lack of a comparable state launch. Kentucky launched at the very September 2023 and had a trailing effect extending into October 2023.

Our North America sports business grew by 6% versus Q3 twenty twenty four. While this is not as much growth as we would have liked to have seen in the quarter, there's a welcome shift from seasonally adjusted sports declines in recent quarters. North America casino business decreased by 12% versus Q4 twenty twenty three. This was also a contraction of 9% versus Q3 twenty twenty four. Caused by competitive pressures driven by the volatile search rankings experienced through multiple Google core algorithm updates. [indiscernible] Looking at the rest of this world, this non core geographical segment accounted for 13% of revenue, and contains our esports, APAC and Latin America businesses. We saw revenue of €1,300,000 which is a decrease of 41% versus last Adjusted EBITDA decreased by 31% versus last year However, our margin increased to 58% as we decreased cost to align with the revenue trends. [indiscernible] Moving into our full company segment performance, we saw a very large decline in our sports revenue. To €2,500,000 versus €5,700,000 for Q4 twenty twenty three. NDCs also decreased in sports by 45%. As mentioned previously, this was driven by underperformance at several grams, and challenging comparables from the Kentucky launch at the very September 2023 which extended into October 2023.

Our sports business grew modestly by 2% versus Q3 twenty twenty four. As mentioned earlier, the North America sports business actually grew by 6% However, declines from our esports business and revenue share churn from remaining European assets impacted the overall segment growth. Losses in our sports business decreased by 42% versus last year as cost control measures took effect. We continue to invest adequately in this segment to turn it around and return to profitability. The casino segment accounted for 75% of group revenue. Revenue decreased by 15% versus the previous year while NDCs increased by 11%. The Rest of World business, which is primarily legacy revenue share from non core assets, decreased by 39% versus last year. The North America Catena business decreased by 12% versus last year. This minor yet disappointing decrease was a result of the tumultuous quarter with very volatile search rankings. [indiscernible] Casino margins decreased by 3% versus the same quarter in 2023. The impact of our cost management programs maintained relatively high margins despite the 15% decrease in revenue. And despite a 7% quarterly decrease in casino revenue, the casino segment margin actually improved by two percentage points Q3 twenty twenty four. That preserved margin can be attributed to our continued cost management programs.

Continuing on to our cost development. We further decreased our cost base in Q4 twenty twenty four by rolling out the new operating model, implementing cost management programs, and terminating unfavorable media partnerships. Our adjusted cost base decreased by 33% versus Q4 twenty twenty three, and 7% versus Q3 twenty twenty four. Our adjusted EBITDA margin for Q4 twenty twenty four landed at 15%, increasing for two consecutive quarters from our low of 5% in Q2 twenty twenty four. We feel that we now have the right sized cost base to fuel sustainable organic growth in 2025. We do not anticipate any further major changes to our cost base at this time. But we do expect direct cost to fluctuate alongside the profitable growth of our media our paid media, sub affiliate and the newly reset media partnerships over the next few quarters. [indiscernible] Total items affecting comparability were €800,000 in the quarter. The vast majority of these were associated with restructuring redundancy costs including those associated with previously announced headcount reductions. Moving on to our financial position. Despite another consecutive quarter of minimal cash flows from operations, the receipts from proceeds of our divested assets through the strategic review continue to put us in a healthy financial position.

We decreased interest costs by repaying the outstanding €10,000,000 balance on a revolving credit facility in Q4. And our only remaining debt is the unsecured senior bond is due in June 2025. [indiscernible] All proceeds from divested assets have been received on time including the final payment associated with the Ask Ambler's divestment which arrived in early February twenty twenty five. As a result, the company is now in a net cash position excluding the hybrid capital securities, which do not have a maturity date. We will use current cash and the remaining outstanding proceeds from divested assets to repay the senior bond due in June 2025. If we now look at our capital structure, our cash balance at the end of the quarter was €8,500,000 We reported a net debt of €12,900,000 at the December. This puts us in a net cash position at the end of the year of €5,600,000 excluding the hybrid capital securities. After adjusting for scheduled inflow of 8 EUR18.5 million in divestment proceeds during Q1 and Q2, And as mentioned previously, dollars 15,000,000 of those proceeds have now So we're already in a net cash position. It is important to note that the final proceeds from past divestments are not conditional on any performance targets, and all payments to date have been received according to plan.

We will use our net cash position and upcoming proceeds from past divestments to repay the senior bond due in June. We currently have no outstanding financial commitments relating to prior acquisitions. Will now hand back over to Manu to give us an update on the strategy and outlook.

We will now have a look into the strategy and outlook for the next few quarters. During the quarter, we have not had any US state launches. Meaning that the overall market penetration remains at the approximately 50% for online sports betting and only 16% for casino, indicating a remaining sizable future opportunity. In 2025, we expect two new market loan launches in North America, Missouri, following the November 24 ballot vote, Missouri Gaming Commission is drafting the online sports wagering regulations. And the market is expected to go live sometime in the second half of the year. Alberta, the legislation is expected to be introduced in the spring of twenty twenty five with no launch date set yet. Alberta will have a model similar to Ontario, including both online sports betting and online casino. Lastly, other casino bills recently introduced include New York Indiana and Illinois, but these are still in the very early stages with less chances succeed. As laid out in the previous reports, our current strategy is focused on three key pillars: people, product and profit. From people perspective, the key initiatives in the quarter include the implementation of an OKR system meant to create alignment and accountability across the organization.

The strengthening of our leadership team with key hirings, such as directors of data, director of SEO, director of engineering, The streamlining of the content organization result in a net reduction of the group's headcount of more than 10%. And the initiation of a return to office hybrid program, which will be fully implemented in the second half of the year and will focus on two hubs, our existing European hub in Malta and a newly created North American hub in Miami.

From product perspective, we have continued to focus our efforts to align with Google's best practices and improve the performance and accessibility of our product. We secured an exciting exclusive partnership with the daily racing form to bring best in class sports betting content and promotions to the DRF customers. This is a great example of the type of strategic partnerships we're seeking to build one that is designed to drive sustainability, profitability, sustainable profitability for both parties. We further enhanced our CRM capabilities, allowing us to build an engaged and loyal customer database. And we have discontinued the AI Catena generation platform joint venture and recovered €700,000 of the original investment. We continue to see it as an important business enhancer, for example, in scaling up content output and quality. Our third and last strategic pillar is profit. We are pleased with the second consecutive quarter of improving as our adjusted EBITDA margin reached the highest level since Q3 twenty twenty three. The cost reduction measures implemented during the quarter are expecting to generate an annual cost saving of €2,200,000 The cost base was reduced by 33% from Q4 twenty twenty three, and we are confident we have rightsized the cost base to fuel sustainable organic growth in 2025.

Lastly, let's recap the key takeaways from our report. First, we are pleased with the second consecutive quarter of improved profitability as our adjusted EBITDA margin reached its highest level since Q3 of twenty twenty three. However, ongoing focus to stabilize the revenue levels as the return to growth will take additional time. Continued implementation of the new product led operating model with clear focus and priorities Regulation in North America remains slow, with very few expecting new states or province openings in 2025. Focus on growth in existing geographies and products, And lastly, we are now in a positive net cash position excluding the hybrid capital securities, which we achieved after the €15,000,000 receipt of the final payment from the S. Chemler sale.

Thank you very much for listening. I will now hand over to Mike to move on to the Q and A session of our report and open up for questions.

Thank you, Manu. I'll now open it up for questions. If we wish to dial in, please press the So our first caller is Oscar from ABG. And Oscar, you've been added into the call now and like to see if you have any questions for us.

Perfect. Thank you. Good morning, guys. Just first on the North America CBA levels. So I think that the revenue is declining a little bit more than the NDC at the moment. So just do you see any sort of continued cost or continued pressure on the CPA levels at the moment? And also if you could talk a little bit about the the outlook as you're hearing from the operators. So do you see any sort of evidence of them being a little bit more positive on on increasing the spend on affiliates at the moment? Or do you still see sort of [indiscernible] Pretty slow market. Thank you.

Hi, Oscar. Good morning. So So I think two parts to that. The first one, the slide leap drop in the average CPA levels. I think there are different numbers of different number of reasons that are contributing to that. And first of all, as as you point out, the pressure from the operators and the operators aiming to optimize their margins. Secondly, I think for us, it's important to know the distribution of where the new depositing customers are coming from. First of all, from an operator perspective, obviously, there are different deals and different types of arrangements. And secondly, also the distribution of NDPs between the different segments even within a segment like Catena. So all those play part into where we ended up with the average CPA number. But overall, as you point out, there's a slight drop quarter on quarter. I think going forward, the operators will continue to try to apply pressure and optimize their margins What we're trying to do on our side is to package good deals for operators. So not necessarily just from the traditional way of looking at things, but trying to include CRM, trying to include other benefits for the operators, including communication to players, videos and other channels.

So overall, I think we've we've managed to secure good long term deals with some of our key partners. But overall, we do continue to see the pressure on CPA.

Got it. Thank you. Then just on any comments on sweeps, both on the performance side and also on the outlook? So we have seen But Could you talk a little bit about, I mean, performance and the outlook that you see on the Thanks.

Absolutely. So from performance perspectives, sweeps continues to grow. We're looking at it as the overall casino segment. And as we communicated previously, for us, Sweeps is an immediate strategy, but also a future term bulletproof for the casino segment, trying to build our brand and our database for states that are yet to regulate. Again, when you reiterate the fact that only sixteen percent of The US population leave lives in states where casino regulation is already in place. So there's a future massive opportunity. Sweets represents that gateway for us to put ourselves in the best possible position for when that happens. So we continue to invest and we continue to grow the sweep segment. It remains one of our fastest fastest growing verticals within Q4. Regarding the the regulatory pressure, I think we continue to see some pressure from some of the states. So far, we haven't seen any of the bigger states, if you will, doing anything or taking any actions. So I think for time being, we're still in a very good position, and we we continue to monitor that. But overall, we haven't seen anything significant to to put us in a position that we need to be concerned about the immediate future of sweepstakes.

Mike, if you want to add anything to that, please do. I think you've covered that off well. Thank you, Manu.

Understood. Thanks. So do you have any sort of comments to give on what you have in terms of positions from the iCasino or the states that maybe launching iCasino in the near future? You talked about Newark and Indiana bills for instance. So is there any sort of regional exposure in the sweeps where you are well positioned ahead of the regulation?

I think so. Without disclosing we have not communicated the distribution per state in The U. S. Per geography. But as you can imagine, New York is one of the largest states in The U. S. And from Swift's first highest amount of traffic and revenues coming. So yes, I think we are generally in a very good position in the larger states in The U. S. So that would be beneficial for us, the potential regulation in the bigger states.

Perfect. Thanks. Next one is just on the financial targets. So you do target double digit growth in revenue and EBITDA. And I mean, you have seen the revenue run rate maybe decrease a little bit during 2024. You're facing quite tough comps in H1. Including the North Carolina launch in Q1 twenty twenty four. And the ranking strength, I think, maybe the volatile, but ended a little bit lower in December. So just on the sort of confidence level going into the 2025 guidance, Is there any sort of immediate uptick that you see from from the new strategy that you have?

Yes. Thanks, Oscar. That's a great question. I think as as we said in the presentation, we're happy to see the profitability improving, but our measures to drive up the revenue are obvious taking longer than anticipated. I think being the positive there, We see the top line drop being at its lowest level for a long period of time, which is somewhat encouraging. So hopefully, that is the bottom line of our of our revenues and we can we can get back to growth shortly. In terms of the comparables with last year, you're absolutely right. Q1 is by far the highest revenue generator or revenue recorded in 2024. The comparables are slowing down into Q2, Q3, Q4. So, I think we're highly confident about the 2025 return to growth and double digit organic growth. However, as you point out, Q1 is is a bit challenging as we have very tough comparables from last year. So I think that's the summary in my view. I think we managed slow down the drop in revenue. We obviously media partnerships played a role into that into the revenues in the first half of the year. State launches in North Carolina, as you point out, played a part into March, April, April.

So we have those, but if we exclude those from the Catena, and we believe that the initiatives we put in place will pay out It's right now the reality that they have not paid out in the time that we're expecting initially, but we're still confident that we have the right strategy in place and we have the right structure in place.

Great. Thanks. And then just a final one, if we excluding the market pressure that we see at moment on the affiliation side, so how do you see the competitive landscape developing? I think you talked a little bit about especially Q3 that you saw increased competition. Still see new affiliates entering the market bigger pressure from the operators that are already in the market? Or is there any change of that? Or do you still feel that you are well positioned to capture any sort of market growth that come into 2025?

So I think a combination of the two, I think we I think the lack of state launches is also adds to that Competitors are focusing on the same markets as we are. The lack of new launches means less distraction you will. So everybody is trying to focus their existing footprint and trying to focus on that So I think we do see that. We do see a high number of operators, and I think that applies for both sports and casino. But again, coming back to where we stand, I think we have very strong products that have unfortunately underperformed for a number of quarters. But with the right strategy and the right structure, I think that we can We can position those products to be leading products in the market. I think we have some really great assets, including bonus.com, PlayUSA, the regional network that are very, very valuable for us, and we with the right strategy and right initiatives in place again. Highly confident that this year we can return to growth.

Perfect. That was all for me. Thank you very much, guys. Thank you, Oscar.

Thank you, Oscar. That's the end of the requested people to call in. So I'm going to move to a few written questions that have been submitted.

So I just have one here. For you, Manu.

Which is, will you do further layoffs or cost cuts going forward?

Thanks, Mike. I think two parts to that. Obviously, as any business, we're always evaluating the efficiency. And we're always looking to optimize our profitability. I think we've done a good job in the last two quarters, but it doesn't end here. We continue to do that. And I'm sure there may be opportunities as we progress. Regarding layoffs per se, right now, as I said, we're confident that we have the structure. We have structured the team in an optimal manner. We have much flatter organization that we did in the past, and it's all aligned behind the product focused setup that we have put in place. The introduction of OKRs, again, may sound like a basic step, but I think it's a great tool to align the entire organization behind it. So for time being, I think we have the right setup and the right structure in the company not to have any discussions about further staff costs anywhere in the near future. But as I said, we're always evaluating our efficiency and continue to look to optimize going forward.

Thanks. And I'll also add on that one that in the section I went through on the cost developments, we do expect the direct costs to fluctuate a bit just in line with performance of those kind of more performance based campaigns that go with media partnerships and sub affiliation and paid media. So we do expect those to move around, but from a cost cutting perspective, there's nothing major on the horizon. I have one more question that came in for you, Manu. Which is why did you discontinue the joint venture? And I think they're talking about the AI based content generation joint venture. [indiscernible] I think that the short story is that after careful evaluation we decided to discontinue and also acquire 100% of the business before liquidating it. But as part of the agreement, we managed to recoup $700,000 of the original investment, which obviously obviously it's a significant amount of cash that we can deploy elsewhere. As we continue to see AI as an important part of our business, as we said in the report, we did not deem these particular this particular deal to be or this particular product to be the right venture for us to realize the AI opportunity.

So I think that's the key part in there. We still believe in the vertical, but this was not it for us. We have 700,000.0 cash out of the [indiscernible] finalization of that agreement and we'll look to deploy that elsewhere and continue to to focus on the AI vertical one or another.

There's a couple of questions that have come in that are more on the financing side. So take those. So there's actually two that are related to the hybrid capital. So I'll try to kind of summarize those together, which is with a weaker revenue profile, how will we manage the interest payments on the outstanding bond and hybrid And also does our financial target regarding net interest bearing debt to adjusted EBITDA include the hybrid securities. So since they're both related, we'll kind of take those together, which is easy one is no. The hybrid securities are treated as an equity in accordance with IFRS. So they're not part of the noncurrent liabilities from an accounting perspective in our financial statements. Important to note that they don't have it and the reason they're considered that is that they don't have a maturity date, so there's no forced repayment on those. When we look at the revenue profile and how we're going to manage the interest payments, And I'd like to say there is that our main focus is about how we resolve our senior debt and the revolving credit facility. The revolving credit facility we paid back in Q4, and the idea there was to kind of decrease the interest payments right away where we could.

And then with the payment that we've already received from AskGamblers, we're going to be able to redeem the senior bond in June. So that's the plan that we've been talking about for quite a while when it comes to what we're doing with proceeds from the strategic review. When you take into consideration the removal of the senior debt, and the RCF, sorry, the senior bond, The interest on the hybrids, although that steps up in July this year, our actual total interest costs will be significantly lower in comparison to where it's been for the past few years. So right now, since the hybrids offer a lot of flexibility in their perpetual, we'll explore other alternatives that are there. [indiscernible] right now, we're probably going to stick with the hybrids and we're not considering any dilutive actions for the company. So our intention is to pay the interest costs and then As things develop, see if there are better more cost efficient ways to finance the company on that side of things. All right, we have one more question that came through. And this is I have been a shareholder for a few years. I'm wondering if you will have to raise more capital during the year, for example, through an emission.

Okay, well I guess kind of answered that in the previous question, which is as of today, we do not foresee any dilutive actions for the company. We're not looking at doing an equity issuance in order to repay the hybrid and we'll be paying the other debt instruments or interest bearing instruments off by the end of the year using available cash that's not in the plans as of today. I'm just checking to see if any more questions have come through. And I don't think they have. So I'm going to hand it back over to Manu for final statements.

Thank you, Mike, and thank you everybody for listening in. And for the questions. Just to recap, during the quarter, we have made significant efforts to improve our profitability and we are pleased to see for two consecutive quarters that we were able to improve our margin and also reach out the highest profitability margin since Q3 of twenty twenty three. So kudos to the team for the work, for the efforts put there, and for the results. And also equally important during the quarter, we have as we said, we have not managed to improve our top line, which remains a focus area for us. Our actions have proven to take longer than we expected initially to pay dividends. So we're we continue to push on developing our products and do the right things in the long run. So we're confident that we will record that double digit organic growth in revenue and adjusted EBITDA by by the end of the year. With that, I thank you all for joining today's call, and we look forward to hosting you on the Q1 report on May 13. Thank you very much, and have a great rest of the week.