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XLMedia announces acquisition as it slips to H1 loss

| By Daniel O'Boyle
Affiliate business XLMedia has announced the £1.8m acquisition of BlueClaw media alongside its H1 results, in which success in North America helped revenue grow but the business slipped to a loss.

Leeds-based BlueClaw offers both SEO and pay-per-click (PPC)-based affiliation, as well as digital PR and content marketing services. XLMedia said that BlueClaw would provide “a UK hub for XLMedia’s European Sports business”.

XLMedia will pay £600,000 when the deal closes and another £600,000 at the end of the first year of the deal. A further £600,000 may then also be paid, depending on certain performance targets.

In the 12 months to 30 November 2021, BlueClaw had revenues of £1.1m and earnings before interest, tax, depreciation and amortisation (EBITDA) of £100,000, though XLMedia noted that the novel coronavirus (Covid-19) pandemic had a notable impact on these results. 

For the 12 months to 30 November 2022 the business expects revenue of £1.6m and EBITDA of £400,000.

Stuart Simms, chief executive of XLMedia, said he was confident BlueClaw was a good fit as the businesses have worked together for more than a year.

“We are delighted to announce the acquisition of BlueClaw, which will see us bring this hugely talented team into the XLM family,” he said. “Having worked closely with them for over 12 months, we’ve been able to experience first-hand the quality of their work and are hugely excited at the prospect of BlueClaw’s expertise being rolled out across our broader portfolio.

“Today’s announcement further demonstrates our commitment to rebalancing the business with the correct skills, people and technologies in order to create a sustainable platform capable of delivering long-term growth.”

XLMedia also announced that its revenue for the first half of 2021 was up 16.2% to $32.2m.

For the first time, North America was XL’s leading market, bringing in $13.5m, up 150.0%. This helped offset a 21.9% decline in revenue from Scandinavia, to $8.9m and a slight dip in the rest of Europe, where revenue was $7.8m.

Revenue from Oceania was down 24.0% to $352,000 while revenue from the rest of the world fell 36.3% to $35,000. The remaining $1.6m came from unidentified locations.

After costs of revenue of $14.0m, up 25.6%, XLMedia’s gross profit was $18.3m – 10.2% more than in H1 of 2020.

The affiliate then paid $15.7m in general and administrative costs – up 20.7%, while research and development costs ticked up to $1.2m and sales and marketing expenses declined 12.6% to $1.9m.

As a result, the business slipped to an operating loss of $573,000 – having made $279,000 in operating profit the year prior.

After net finance-related income of $35,000 and $99,000 in other income, XLMedia made a pre-tax loss of $439,000, compared to 2020’s $171,000 pre-tax profit.

After tax benefits, the affiliate made an $82,000 loss, compared to a $99,000 profit in H1 of 2020.

Simms said the business worked to continue to grow its presence in H1.

“We continued to make further organisational progress in the first six months of the year, as we expanded our portfolio of high-quality branded sites, whilst also laying the foundations to improve the use of our first party data,” he said. “The combined positive impact resulted in a strengthened US Sports division, increase of regulated market and new money revenue, as well as the development of a significantly improved data architecture and infrastructure to serve the Group’s long-term ambitions.”

He added that acquisitions would continue at a faster pace during the second half of the year.

“During 2021, I have challenged the business to accelerate the acquisition of new assets, reorganise and re-build our capability and to develop a new data and technology platform,” he said. “I am proud of the team and our achievements, and have confidence that the necessary changes will result in improved focus, productivity and growth in H2 2022 and beyond.”

Earlier this month, XLMedia announced that it had acquired online US college football news publisher Saturday Football for a total consideration of $23.0m.

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