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XLMedia shares fall to record low as group predicts revenue, earnings drop

| By Richard Mulligan
XLMedia saw its share price fall to a record low after announcing that revenue for 2023 would be below previous years due to shortfalls in North America.

XLMedia shares dropped 23% to 5.86 pence each – the lowest since the company floated in 2014 – following Friday’s announcement. The affiliate group’s board also said in the same statement that it will not pursue the sale of the company after talks with potential suitors failed to progress.

The group’s revenues for the full year are now expected to be in the range of $50m to $52m while adjusted EBITDA is expected to be in the range of $12m to $14m. XLMedia reported revenue of $73.7m in 2022 and $66.5m in 2021, while EBITDA was at $16.7m and $17.9m in those years respectively.

XLMedia’s mid-year challenges in North America

In its pre-close trading statement, XLMedia said that mid-year challenges in the North American market were the cause of the overall decline in expectations.

The business had noted when publishing its interim results in September that it was suffering due to a reduced level of customer acquisition marketing activity by some operators. In particular, the withdrawal of its major partner Barstool Sports resulted in a significant change in the revenue profile of the group’s North American activities.

XLMedia said the launch of ESPN Bet in mid-November had seen an uplift in revenues and it expects to deliver a strong close to the year in North America. In further encouraging news, the group’s European brands Nettikasinot, Whichbingo and Freebets remain on track to deliver strong year-on-year growth in the full year.

However, it added: “While there is still opportunity to generate significant revenues in the remainder of the year now that December acquisition budgets have been confirmed, it is now unlikely that this will fully compensate for mid-period shortfalls and, consequently, North American revenues will now fall below previous forecasts.”

XLMedia said it expects to see continued progress from its European brands in 2024, while continuing to build its North American-owned and operated brand and media partner footprint.

XLMedia has discussed sale of whole business

In a further announcement, XLMedia said a broad review focused on creating shareholder value led to discussions with interested parties on the sale of assets and the company as a whole. XLMedia has already disposed of a number of business assets over the last year, including the sale of three Europe-facing casinos for $4.0m (£3.1m/€3.6m) in July.

However, while XLMedia said there is demand to buy the business given its current low share price, it had decided that a sale of the whole company is unlikely to create the most value for shareholders and no current discussions are ongoing in relation to this.

“The board therefore does not plan to undertake the sale of the whole company at this time,” it said in a trading update.

XLMedia’s exit from non-core activities

XLMedia announced last December that it would be pursuing a strategy of exiting non-core activities. It would instead, it said, focus its resources on growing in North America, as well as strengthening its position in the European sports and gaming market.

In line with this strategy, XLMedia sold its entire personal finance assets portfolio in May 2023. The sales of the MoneyUnder30 domain and website for $675,000 marked the end of the process, which was first announced in December 2022. At the time, XLMedia said it had held talks with various parties regarding the potential sale of the personal finance division as part of a restructuring process.

It then sold three European online gaming sites – Casino.se, Casino.gr and Casino.pt – to Beach Services in July for a 4.7 times multiple of revenue. In the year ended 31 December 2022, the three assets generated $840,000 in revenue. This accounted for 6% of all European casino revenue, while gross profit reached approximately $750,000.

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