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XLMedia’s Share Price Plunge

XLMedia's Share Price Plunge
by
December 18, 2023
in Business News, Finance News
257

XLMedia, a prominent affiliate marketing group, witnessed a drastic drop in its share price, reaching a record low. The company announced that its revenue projections for the year 2023 are anticipated to be below previous years, primarily attributing the shortfall to challenges in the North American market.

Share Price Plummet

XLMedia’s shares experienced a significant decline, plummeting by 23% to 5.86 pence each—marking the lowest point since the company’s initial public offering in 2014. This downturn came shortly after the company’s revelation regarding the subdued revenue outlook for the current fiscal year.

Revenue Projections and Earnings

The affiliate group disclosed that it expects its revenues for the full year to be in the range of $50 million to $52 million. Simultaneously, the adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is anticipated to fall within the range of $12 million to $14 million. This is a notable decrease compared to the figures reported in 2022, where the revenue stood at $73.7 million, with EBITDA reaching $16.7 million.

Mid-Year Challenges in North America

In its pre-close trading statement, XLMedia attributed the decline in overall expectations to mid-year challenges in the North American market. The company had previously highlighted in its interim results in September that a reduced level of customer acquisition marketing activity by some operators, coupled with the withdrawal of its major partner Barstool Sports, contributed to the adverse conditions.

Positive Developments and European Growth

Despite the challenges faced in North America, XLMedia reported positive developments with the launch of ESPN Bet in mid-November, leading to an uplift in revenues. The company remains optimistic about closing the year on a strong note in the North American market. Additionally, XLMedia’s European brands, including Nettikasinot, Whichbingo, and Freebets, are on track to deliver robust year-on-year growth.

Future Outlook and Strategic Shift

XLMedia envisions continued progress from its European brands in 2024, emphasizing the importance of building its North American-owned and operated brand while expanding its media partner footprint.

Strategic Review and Asset Disposal

In response to the challenging market conditions, XLMedia conducted a broad review focused on creating shareholder value. Discussions with interested parties regarding the sale of assets and the company as a whole ensued. Notably, XLMedia has already disposed of several business assets over the past year, including the sale of three Europe-facing casinos for $4.0 million in July.

Decision Against Company Sale

Despite the current low share price and interest from potential buyers, XLMedia announced that it has decided against pursuing the sale of the entire company at this time. The board emphasized that such a move is unlikely to create the most value for shareholders, and no ongoing discussions are in progress concerning the sale of the entire company.

Shift in Strategy

XLMedia had previously outlined its strategy to exit non-core activities and focus on growth in North America, along with strengthening its position in the European sports and gaming market. This strategic shift led to the sale of its entire personal finance assets portfolio in May 2023, including the MoneyUnder30 domain and website for $675,000.

Continued Asset Disposal

Further aligning with its strategic objectives, XLMedia sold three European online gaming sites—Casino.se, Casino.gr, and Casino.pt—to Beach Services in July. The sale, at a 4.7 times multiple of revenue, was part of the company’s ongoing restructuring process. These assets had generated $840,000 in revenue for the year ended December 31, 2022, constituting 6% of all European casino revenue.

Frequently Asked Questions (FAQs)

Why did XLMedia’s share price reach a record low?
XLMedia’s share price plummeted due to the announcement of anticipated revenue below previous years, primarily attributed to challenges in the North American market.

What led to the decline in revenue expectations?
Mid-year challenges in the North American market, including reduced customer acquisition marketing activity and the withdrawal of a major partner, Barstool Sports, contributed to the decline in revenue expectations.

How did the launch of ESPN Bet impact XLMedia’s revenues?
The launch of ESPN Bet in mid-November resulted in an uplift in revenues for XLMedia in the North American market.

Are there positive developments despite the challenges in North America?
Yes, XLMedia’s European brands, such as Nettikasinot, Whichbingo, and Freebets, are on track to deliver strong year-on-year growth.

What strategic shift did XLMedia undertake?
XLMedia shifted its strategy to exit non-core activities and focus on growth in North America, alongside strengthening its position in the European sports and gaming market.

Has XLMedia recently sold any business assets?
Yes, XLMedia has disposed of several business assets, including the sale of three Europe-facing casinos for $4.0 million in July.

Is the entire company of XLMedia up for sale?
No, XLMedia has decided against selling the entire company at this time, citing that it is unlikely to create the most value for shareholders.

What is XLMedia’s outlook for 2024?
XLMedia expects continued progress from its European brands in 2024 and aims to build its North American-owned and operated brand while expanding its media partner footprint.

Why did XLMedia sell its personal finance assets portfolio?
As part of its strategic shift, XLMedia sold its entire personal finance assets portfolio in May 2023 to focus on core activities and growth areas.

How did the sale of three European online gaming sites contribute to XLMedia’s financials?
The sale of three European online gaming sites—Casino.se, Casino.gr, and Casino.pt—to Beach Services in July, at a 4.7 times multiple of revenue, contributed to XLMedia’s ongoing restructuring process.

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