(Alliance News) - Shares plunged in XLMedia PLC on Monday as its interim profit and revenue dropped as a result of operational issues and regulatory headwinds, affecting its outlook for 2019.
XLMedia also announced the appointment of Liat Hellman as interim chief financial officer with immediate effect, following the departure of Yehuda Dahan after six years since 2013.
XLMedia specialises in performance-based online marketing for clients in online gambling, personal finance and other fields.
The stock was 23% lower at 58.00 pence on Monday in London.
Hellman has been part of XLMedia for seven years since 2013, as chief financial officer of the group's subsidiary Webpals Group.
XLMedia has started the search for a permanent appointment to the group finance role.
"We'd like to extend our thanks to Yehuda for his long-standing contribution to the group. We wish him every success for his future endeavours," said Chair Chris Bell.
For the six months to the end of June, XLMedia's pretax profit dropped by 22% to USD13.8 million from USD17.6 million the year before, on revenue that declined by 10% to USD42.5 million from USD47.2 million.
Adjusted earnings before interest, taxes, depreciation and amortisation decreased by 14% to USD18.6 million from USD21.6 million the prior year.
XLMedia attributed the weaker performance to regulatory changes in the gambling industry, leading to a delayed recovery in market performance, as gambling operators cease their activities in certain markets or limit the deposits they can accept from players.
Regulatory changes include new gambling legislation in Sweden and a new regulatory regime for online casinos in Switzerland.
XLMedia also cited revenue pressure in the online German casino sector due to regulatory uncertainty and in the UK from an "evolving" regulatory landscape.
XLMedia declared an interim dividend of 3.1584 US cents per share, up 5.1% from 3.0040 cents a year before.
Looking ahead, XLMedia said that regulatory development will affect the group's performance for 2019, as will a lack of acquisition activity, which had been expected to deliver additional Ebitda.
As a result, XLMedia expects adjusted Ebitda for the year to be around USD34 million, down 22% from USD43.9 million in 2018, on revenue set to decline by 32% to USD80 million from USD117.9 million.
"This year has proven to be challenging for both XLMedia and the industry as a whole, as the gaming industry changes and regulates. However, this does result in the group having greater visibility, more sustainable revenues and stable earnings," said Chief Executive Officer Ory Weihs.
"Whilst we expect this disruption to continue in the midterm, we remain committed to our stated strategy, focusing on publishing. We continue to diversify our asset base, specifically developing our US gambling strategy and the personal finance sector, in which we continue to make good progress with this sector now accounting for 14% of the group's revenues," Weihs added.
Xlmedia (XLM)