XLMedia reports operational challenges amid gambling regulation uncertainty

Digital performance marketing services provider, XLMedia, has reported a “challenging year” after its full year report, ending 31 December 2018, saw revenues, gross profit and EBITDA take a hit.

The group attributed this primarily to “operational challenges”, with its 2018 performance impacted by the “adverse impact of gambling regulation uncertainty in specific territories, website ranking issues impacted by spamming and other attacks on key publishing assets.”

The report detailed: “As previously announced, these actions will lead to an expected reduction in 2019 adjusted EBITDA. However, these changes are expected to deliver higher profit margins, more sustainable and ultimately better quality earnings.”

The firm’s CEO Ory Weihs commented: “2018 has been a challenging year but our business is built on strong foundations giving us the confidence to cease low margin activities and concentrate on the higher margin Publishing division, returning the business to growth.

“Looking ahead, the Group will be prioritising internal investment across its publishing activity to further build its asset base organically, in particular, in the North American gambling and personal finance verticals. Whist we continue to assess strategic acquisition opportunities, we anticipate the bulk of our mid to long-term asset growth to come from organic asset development.

“Our focus remains firmly on improving operational excellence and further developing assets organically to maximise shareholder value.”

The digital marketing provider reported a 14.4 per cent hit to revenue at $117.9 million (2017: $137.6 million), while specifying that they wish to pursue more of a proactive shift to higher margin activities and sustainable revenue growth going forward.

Adjusted EBITDA decreased 6.9 per cent to $43.9 million (2017: $47.1 million), while there was an improvement in H2 2018 versus H1 2018 – up 9.8 per cent to $23 million.

The group’s nascent personal finance business has demonstrated continual growth and has strengthened its North American presence, with six per cent of overall revenues now derived from this vertical (2017: 2 per cent).

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