Google deranking and COVID-19 bite XLMedia’s H1 performance

XLMedia has continued to feel the effects of Google’s ‘manual ranking penalty’ on its corporate trading, but remains optimistic on its objective of delivering ‘a material recovery in financial performance in 2021’.

Publishing its 2020 interim statement (period ending 30 June), the affiliate marketing publisher detailed that the combined effects of COVID-19 and Google ranking penalties had resulted in monthly revenue running ‘approximately $2 million behind the expectations’.

During H1, XLMedia posted revenues of $27.7 million, down 35% from $42.5 million in the same period last year, which was broadly in line with predictions made in July. XLMedia explained that this was driven by the aforementioned impacts as well as ‘the closure of its remaining Media business’.

Stuart Simms, Chief Executive Officer of XLMedia, commented: “Our business has endured a number of unforeseen challenges during 2020 but, as we enter the second half of the year, I believe we are seeing signs of recovery in some key areas.

“These green shoots, coupled with a detailed and diverse plan to mitigate the impact of the Google manual ranking penalty, give me and the Executive team confidence we can enter 2021 with significant positive momentum and enhanced levels of control.”

Operating headwinds saw XLMedia’s H1 2020 gross profits decrease by 42% to $16.1 million, down from $28.8 million.

Meanwhile adjusted EBITDA in the first half of 2020 was $5.1 million, marking a 73% on 2019’s figure of $18.6 million, which XLMedia attributed entirely to its severe revenue reduction.

XLMedia explained that unlike some of its competitors, the January Google deranking has prevented the company’s casino division from being able to take full advantage of the industry-wide uptick in online casino and gaming.

In its results, XLMedia expressed concern over the ‘clear signs of second waves of Covid-19’ across its core territories, which could result in further restrictions on its personal finance and sports divisions.

Simms added: “The second half of the year has started positively with much of the global sports programme being reopened and compressed into a couple of months, an uptick in Personal Finance activity and the stabilisation of the Casino vertical.

“However, there are clear signs of second waves of Covid-19 across the territories we operate in, and any tightening of restrictions could impact the recovery in our Personal Finance and Sports verticals; the very recent second lockdown in Israel could also delay elements of the transformation programme.”

Looking to the future, however, XLMedia has highlighted its confidence in the organisational changes rolled out over the last year.

With the addition of Iain Balchin as Chief Financial Officer, Sarah Clark as Chief Operating Officer and Ken Dorward as President, North America, XLMedia plans to develop a ‘suite of websites fit for the future’ which will subsequently drive material financial recovery in 2021.

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