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(Alliance News) - Dianomi PLC on Monday said it expects revenue for 2023 to fall from a year earlier and to come in below market expectations, after noting the decline in traffic volumes as a "key challenge" for publishers.
Dianomi shares dropped 40% to 47.15 pence each in London on Monday morning.
The London-based digital advertising platform said it expects 2023 revenue to be between GBP30.5 million and GBP32.5 million, falling 9.5% to 15% from GBP35.9 million in 2022.
The company also expected an 18% fall in revenue in the first half of 2023 from the same period a year earlier, when it was GBP18.0 million. This was because the prior year benefitted from a strong first quarter, Dianomi said, before "advertiser caution set in" in the second quarter of 2022.
Dianomi also noted a 10% to 30% fall in traffic levels across its direct publisher inventory in the first half of 2023 from a year earlier.
"As a consequence, while demand from Dianomi's [over] 400 premium financial and lifestyle advertisers has remained consistent with the backdrop announced at full year 2022 results, the reduced traffic across its publishers naturally impacts Dianomi's ability to generate revenue from the adverts it places on their digital properties," the company explained.
"Furthermore, certain new publisher partnerships did not materialise in the expected timeframe to offset the decline in traffic across existing publishers, though they remain future opportunities. Readership levels are also perhaps finding a new 'normal' level post pandemic."
Dianomi said its operational cost base had significantly improved following the restructuring of its global management and sales teams in March, reducing costs by around GBP1 million on an annualised basis.
Cash at June 30 was GBP7.1 million, down 39% from GBP11.7 million on December 31, which Dianomi said reflected the unwinding of the working capital benefit highlighted at its 2022 annual results, the delay in receipt of overdue debtor balances of around GBP1.2 million received shortly after the end of 2022, one-off GBP800,000 restructuring costs, and foreign exchange movement as a result of the strengthening of the pound against the dollar during the period.
Looking ahead, Dianomi said it continues to expand its distribution channels "in order to generate increased and more predictable future income streams through".
This includes further developing programmatic distribution, which it described as a "key driver" of future growth," alongside continuing to scale both existing and new publisher partnerships to scale both existing and new publisher partnerships.
The company noted sixfold growth in programmatic revenue in the half-year period, "albeit from a relatively modest base", proving opportunities to "unlock further demand from its premium advertisers and scale the budgets they spend via the company's trusted and brand safe platform".
Dianomi said it remains debt free and expects improved cash generation in the second half of 2023.
"The fall in traffic levels will impact our business and the wider industry this year, nevertheless, it also serves to highlight the importance of developing our ability to scale distribution on a programmatic basis through the intelligent use of our deep understanding of context and engagement," said Chief Executive Officer Rupert Hodson.
"We are continuing to attract new customers and expanding distribution through programmatic initiatives. We are therefore in a solid position with a strong balance sheet but as a business we are looking beyond the near term and focusing on our future ability to offer our existing customer base the option to substantially increase their spend with us."
By Greg Rosenvinge, Alliance News reporter
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