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(Alliance News) - XLMedia PLC warned on next year's profit on Thursday as it begins a reorganisation which will include a focus on publishing activities.
Limassol, Cyprus-based XLMedia shares fell 19% on Thursday to a price of 48.03 pence each.
The digital marketing firm appointed Stuart Simms as chief executive in October, who then began an internal review of operations.
XLMedia has come up with three decisions moving forward: investing into and expanding global publishing activities, reviewing its technology platform, and an organisational restructuring.
XLMedia is to increase spending on publishing beyond historical budgets, it said, including both organically and via acquisitions. A review of the technology platform will happen in the coming months, the firm said, while the transformation plan has seen executive positions be cut that were held at both headquarters and in subsidiaries.
The overall one-off cost of transforming the organisational structure will be around USD3 million over 2019 and 2020, the company added.
On the trading front, XLMedia said trading for 2019 is in line with previous guidance, and it has reiterated guidance of USD78 million of revenue and USD32 million of adjusted earnings before interest, tax, depreciation, and amortisation. This compares to USD117.9 million and USD43.9 million respectively the year prior.
The US sports betting market, which is growing rapidly, has XLMedia "encouraged", it said, though it did note regulatory headwinds are going to increase uncertainty.
"The combination of increased spend on direct costs to support growth, further predicted regulatory headwinds and implementation of a transformation plan which prepares XLMedia for the next phase of growth means the board is today also updating market guidance for the year 2020," said XLMedia.
"The initiatives are proactive measures designed to benefit the business in the longer term. As a result of those measures, the investment and costs budgeted for 2020 are significantly higher than previously anticipated and will consequently impact the overall performance of the group. Therefore, despite revenue for 2020 expected to remain broadly stable versus 2019, adjusted Ebitda is anticipated to be materially lower than previous management expectation," the company continued.
By George Collard; georgecollard@alliancenews.com
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