Xlmedia Regulatory News (XLM)

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

27 July 2023

XLMedia PLC

("XLMedia" or the "Group" or the "Company")

Trading Update

&

Notice of Results

Significant progress on delivering strategy

XLMedia (AIM: XLM), a leading global digital performance publisher, today provides the following trading update for the six months ended 30 June 2023 ("H1 2023").

In H1 2023, total revenues were approximately US$29.4 million (H1 2022: US$44.5 million) and total Adjusted EBITDA was approximately US$6.5 million (H1 2022: US$10.6 million). Adjusted EBITDA for the full year remains in line with management's expectations after adjustment for the sale of the three European Casino Assets announced on 12 July 2023.

As previously reported, the Group's period-on-period performance reflects the timing, number and scale of new state launches in the United States ("US"). In particular, operator marketing activity around the launch of New York (the fourth most populated state) in January 2022, was not repeated at the same level with the launch in January 2023 of online sports betting in Ohio (the seventh most populated state).

In contrast, the Group has delivered new growth across the core assets in Europe in both Gaming and Sport, whilst also reducing cost and simplifying the organisation structure, including reducing the Group's overall headcount by 14% during the period.

Strategy Update

Momentum is building in line with our stated strategy of diversifying revenues and expanding the Group's footprint. Key highlights include:

· Revenue share deals have been signed with bet365 and Betway in the US enabling the Group to participate in betting revenues generated by these operators.

· To further diversify revenues:

o  Daily Fantasy Sports ("DFS") game promotions and offers are live on the portfolio's sports media sites and we expect audience adoption to grow rapidly once the new NFL season starts.

o  New display media advertising and sponsorship packages have been launched for the 2023 American football season (for both NFL and NCAA).

· The successful partnership with Schneps Media has been re-signed extending amNY for a further three years.

· Increased US Gaming casino traffic by 124% (H1 2023) in three key states growing non-seasonal revenues.

· HoneyMonkeyPineapple will launch imminently as our premium Gaming site in the US offering a fun place for customers to find new casino games.

· In Europe, Freebets.com has been launched in Ireland accessing the horse racing market there, and in readiness for new the Premiership football season.

· We have launched our Dynamic Offer Engine, a proprietary ad serving technology, enabling us to automate and optimise conversion rates from new sports betting promotions and offers while using new AI tools to enhance content creation.

· We have exited non-core activities including the sale of the loss-making Personal Finance business, Reef Media and Blueclaw which contributed US$0.6 million revenue (H1 2022: US$2.1 million).

· The sale of three of the Group's European Gaming domains and associated websites, Casino.se, Casino.gr, and Casino.pt was completed for a total upfront cash consideration of US$4.0 million in July 2023, representing a 4.7 times multiple on revenue.

· Preparations for Kentucky state launch of online sports betting (28 September 2023) are underway, and the Group is focused on capitalising on its substantial southeast footprint, with North Carolina expected to launch in Q1 2024.

In summary, the Group has launched into new markets, developed new brands, diversified revenue streams, expanded Sports and Gaming, signed new partnership agreements, and refocused on its core activities. XLMedia is ready for new state launches when they come.

Sports

The launch of online sports betting in Ohio provided a strong start to the year coupled with the growing revenues from Freebets.com, our premium Europe/UK sports betting site, resulted in revenue of approximately US$21.4 million (H1 2022: US$34.0 million) in the Group's Sports vertical.

Our EU Sports operations contributed approximately US$5.2 million (H1 2022: US$3.8 million) with notable highlights around the performance from Freebets.com. Real Money Players ("RMPs") grew in H1 2023 by 36% period-on-period and revenue grew in by 50% period-on-period resulting from a strong Cheltenham Festival, the Grand National meeting at Aintree, Royal Ascot and a good end to the English Premier League football season.

North America saw several operators limit their marketing spend, reducing customer acquisition activity around the Superbowl and the offseason, as they reviewed marketing tactics in the evolving US market. Together, the Massachusetts and Ohio launches did not reach the same scale as New York's launch did in 2022. North America Sports revenues were US$16.2 million (H1 2021: US$30.2 million). 

The delay in confirmation of the regulatory regime around the Massachusetts launch, combined with the launch occurring after the NFL season had ended resulted in a more muted initial revenue spike. However, the upcoming NFL season presents a second opportunity to launch sports betting in Massachusetts.

With the highly anticipated Kentucky launch in September 2023 expanding our operations to 20 states, our North American Sports business continues to be driven by the Group's high-quality content, offering audiences both national and local sports coverage and sports betting content that builds engagement and trust to connect sports fans with operators when promotions are available. Additionally, the XLMedia teams continue to deliver exclusive sports betting content for media partners that offers targeted, relevant and engaging information for sports fans in those markets where it is permitted.

Gaming

The Group's Gaming vertical as a whole generated revenue of US$7.4 million (H1 2022: US$8.4 million). The trading performance of the three sold EU gaming assets is included in the results up to the point of sale.

Following its restructuring in 2022, the Group's European Gaming vertical (casino and bingo) is trading marginally ahead of management expectations, generating revenue of US$7.0 million (H1 2022: US$8.0 million). RMPs grew 9% year-on-year in the period as the rebuilding of the gaming business continued while creating future tail revenues. In the short-term, the decline in historical tail revenues continues to impact period-on-period growth, however the business expects to return to overall growth over time.

· WhichBingo grew revenue in H1 2023 by 38% period-on-period and grew RMPs by 28% period-on-period. H1 2023 was the strongest performing half year ever.

· Nettikasinot grew revenue in H1 2023 by 5% period-on-period and grew RMPs 16% period-on-period.

North American Gaming revenues in H1 2023 were US$0.4 million (H1 2022: US$0.4 million). During the period, we rebuilt the casino offering across the owned and operated portfolio, extending the offering to a number of partner sites. This increase in operational activity will culminate in the launch of HoneyMonkeyPineapple, a premium branded gaming site serving the North American market.

Disposals

In December 2022, the Group announced the intention to sell the loss-making Personal Finance business, announcing the completion of the sale of these assets in H1 2023 for a total cash consideration of US$2.05 million. Revenues for the Personal Finance business in the period prior to sale were US$0.5 million (H1 2022: US$0.8 million) at a US$0.3 million loss.

Post period end, on 12 July 2023, we announced the disposal of three of the Group's European Gaming domains and associated websites, Casino.se, Casino.gr and Casino.pt, for a total upfront cash consideration of US$4.0 million, representing a 4.7 times multiple on revenue. The Group will continue to operate its Gaming business in the Swedish and other European markets and has launched Kasino.se, a new site focused on the Swedish market.

These sales generated gross sale proceeds of approximately US$6.0 million and provides the Group with additional working capital and funds further investment to drive the expansion of the North American Sports and Gaming footprint and advance its EU portfolio.

Cash

Cash balances (including short-term deposits) at the end of June 2023 were approximately US$7.4 million (FY 2022: US$10.8 million, H1 2022: US$17.7 million) with the subsequent proceeds of the sale of the three gaming assets in July 2023 increasing the balance by approximately US$4.0 million.

The Group's acquisition program between Q4 2020 and 2021 resulted in it committing to future acquisition and earn out payments as part of the acquisition consideration, to be substantially funded from the Group's free cashflow. During the period, the Group made earnout payments of US$3.4 million (H1 2022: US$3.0 million). The Group did not pay any deferred acquisition payments in the period (H1 2022: US$10.0 million) but expects to pay a further deferred acquisition payment of US$4.0 million in H2 2023.

The Group also made tax payments relating to settlements of historical agreements with local tax authorities of US$2.1 million and paid US$0.7 million to tax authorities in the jurisdictions it operates in during the period.

Board Changes

In March 2023, the Board agreed to implement a reduction of 15% in the level of fees paid to Non-Executive Directors (including the Chair) with effect from 1 April 2023, as well as streamlining its panel of advisors and agreeing fee reductions with a number of them. Additionally, Richard Rosenberg and Jonas Mårtensson both indicated their intention to step down as Directors of the Group and have ensured a smooth transition of their responsibilities. Mr. Mårtensson stepped down from the Board at the end of June while Mr. Rosenberg will remain on the Board until the end of September 2023 both having successfully served the Company for many years.

Notice of H1 Results

XLMedia expects to report unaudited interim results for the six months ending 30 June 2023, in the week commencing 25 September 2023. The Group will hold a webcast for shareholders and will provide details of the facility nearer the time.

For further information, please contact:

About XLMedia: 

XLMedia (AIM: XLM) is a leading global digital media company that creates compelling content for highly engaged audiences and connects them to relevant advertisers.

The Group manages a portfolio of premium brands with a primary emphasis on Sports and Gaming in regulated markets. XLMedia brands are designed to reach passionate people with the right content at the right time.